GOOD GAMING, INC. - Annual Report: 2013 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
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Commission File Number: 000-53949
HDS INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
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Nevada
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(State or other jurisdiction of incorporation)
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(I.R.S. Employer Identification No.)
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10 Dorrance Street, Suite 700
Providence, RI 02903
(Address of principal executive offices and Zip Code)
(401) 400-0028
(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to section 12(g) of the Act:
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NONE
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COMMON STOCK
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO x
Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act: YES x NO o
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 preceding 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer (Do not check if a smaller reporting company)
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Smaller Reporting Company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO x
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2013: $533,933
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 377,203,075 as of March 26, 2014.
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Business.
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Risk Factors.
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Unresolved Staff Comments.
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Properties.
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Legal Proceedings.
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Mine Safety Disclosures.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Selected Financial Data.
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Management’s Discussion and Analysis of Financial Condition and Results of Operation.
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Quantitative and Qualitative Disclosures About Market Risk.
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Financial Statements and Supplementary Data.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
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Controls and Procedures.
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Other Information.
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Directors, Executive Officers and Corporate Governance.
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Executive Compensation.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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Certain Relationships and Related Transactions, and Director Independence.
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Principal Accountant Fees and Services.
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Exhibits and Consolidated Financial Statement Schedules.
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| ITEM 1. | BUSINESS. |
General
HDS International, Inc. (the “Company”, “we”, or “us”) is a green technology company providing renewable energy and eco-sustainability solutions. We are a developmental stage business, have not generated any revenues to date and have a history of operating losses.
The Company was incorporated November 3, 2008 under the laws of the State of Nevada, to engage in providing certain business services.
On August 16, 2011, we entered into an Asset Acquisition Agreement (the “Agreement”) with Hillwinds Ocean Energy, LLC, a privately held consulting company (“HOEL”), under which we acquired from HOEL certain of HOEL’s assets, including a certain license relating to technologies for gas exchange, carbon dioxide capture and sequestration, algae biomass production and other renewable energy and eco-sustainability applications.
In exchange for the assets, we paid HOEL consideration of: (a) 7,500,000 shares of our Class A Preferred Stock, $0.001 par value per share; (b) 250,000,000 shares of our common stock, $0.001 par value per share, and (c) a twelve month, 10% promissory note in the sum of $325,000. HOEL is the majority owner of our issued and outstanding common stock and sole owner of all our issued and outstanding preferred stock.
Simultaneous with the Asset Acquisition Agreement, our former president, Mr. Mark Simon, returned for cancellation 440,820,000 shares of common stock, which were cancelled by us, and resigned from his positions as officer and director of the Company. Mr. Tassos D. Recachinas (“Mr. Recachinas”), president of HOEL, was appointed as our president and to our board of directors, becoming our sole officer and director. Mr. Recachinas continues to serve as president of both HOEL and of our Company, and as president and sole director of HOEL, exercises supermajority control over our Company.
We determined the consideration for the assets and the license through negotiation. There is no comparable product/license on the market, accordingly it could be said that the price for both was arbitrarily determined.
Pursuant to the terms of the license, we acquired the exclusive rights to develop, make, use, market and sell certain products and to practice certain processes within our licensed territory. Our licensed territory under the license consists of Back Bay, New Brunswick, Canada, and any geographical area within 50 miles from the center of Back Bay, with the boundary on the west being the border with the State of Maine in the United States. We believe our licensed territory offers favorable geological conditions conducive to the implementation of our underlying technologies.
On October 1, 2011, we reached a management consulting agreement with Alexander M. Chirkov, M.D., Ph.D., (“Dr. Chirkov”), whereby Dr. Chirkov became our Chief Scientific Officer. Our core technologies were developed by Dr. Chirkov and we believe we require his involvement to deploy, implement and commercialize our technologies.
On October 7, 2011, the Company expanded its intellectual property portfolio by entering into a certain new license agreement (the “October 2011 License”) with Hillwinds Energy Development Corp. (“HEDC”), which is controlled by our President and sole Director. The October 2011 License was identical in geographic territory as the August 16 License, but addressed newly developed technology.
On October 22, 2012, we formed a wholly-owned Canadian-based subsidiary, HDS Energy and Ecosystems NB, Ltd, headquartered in Saint John, New Brunswick, Canada, to be responsible for HDS International’s business and research and development interests in the Province of New Brunswick, Canada. The subsidiary was established to facilitate HDS International’s sales, marketing, grant application, and other business development efforts within the Province, as well as in response to certain potential customer requirements in the Province.
On November 30, 2012, we reached a seven year exclusivity agreement with the City of Saint John, NB, Canada for the installation of an anaerobic digester, beginning with a feasibility study. Under the terms of the agreement, HDS has received exclusive rights to pursue the installation of anaerobic digester waste-to-energy systems to operate in conjunction with the City of Saint John’s wastewater treatment infrastructure. We intend for the anaerobic digester project to incorporate HDS’ licensed carbon capture and algae biomass production technologies incremental to a traditional anaerobic digester’s functionality. Initially,
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HDS will be responsible for leading a feasibility study for an anaerobic digester facility that would incorporate its technologies at the City of Saint John’s “Lancaster” Wastewater Treatment Facility site, at its own expense. The City will contribute staff support and other internal assistance to HDS during the study, and has agreed to team on any grant applications identified by HDS. The agreement was executed by HDS’ President and CEO, as well as Saint John’s City Manager after receiving approval by resolution of the City’s Common Council.
If the City of Saint John determines to proceed under our agreement to implement an anaerobic digester incorporating our licensed carbon capture and algae biomass production technologies project based on our feasibility study, we will seek to negotiate a new contract with the City of Saint John to earn revenues as general contractor of the project. We intend to seek to generate revenue through subcontracting the anaerobic digester installation to an experienced anaerobic digester manufacturer and installer, and generate additional revenues through the sale of our carbon capture and algae biomass production equipment required by the project. We are unable to accurately predict our potential for revenues from our contract until we complete our feasibility study.
On December 10, 2012, through our wholly-owned Canadian subsidiary, HDS Energy and Ecosystems NB, Ltd., we entered into a new technology license agreement with HEDC, which expands the geographic territory under our previous technology licenses. All previous license agreements between HDS and HEDC, including the license under asset acquisition agreement dated August 15, 2011, and the intellectual property agreement consummated October 7, 2011 (dated September 2, 2012) have been terminated and superseded in their entirety by the new license agreement (the “NB Provincial License”).
The NB Provincial License expands our exclusive geographic territory to cover the entire Province of New Brunswick, Canada, as compared to the previous exclusive geographic territory under our other licenses, which was defined as Back Bay, New Brunswick, Canada, and any geography within 50 miles from the center of Back Bay, with the boundary on the west being the border with the State of Maine in the United States. We intend to earn revenues from the license agreement by developing, marketing and selling products utilizing HEDC’s technologies within our licensed geographic territory.
The financial terms of the NB Provincial License transaction to expand our geographic territory were deemed immaterial, with no cash or securities paid or owed by the Company to HEDC. HEDC is controlled by the Company’s officers and directors, who also control the majority of the Company’s basic and fully diluted shares of common stock, and accordingly this transaction was classified as a related-party transaction and was not conducted at arm’s-length.
As of the date of this report, we have no contracted revenue stream and have taken only minimal steps toward the development of our business.
Technology
Our licensed technology and intellectual property portfolio consists of gas exchange technologies to capture, store, biosequester and reutilize carbon dioxide, and biomass production technologies for growth of algae (or other vegetation) for marketable purposes.
We believe that our carbon capture technologies can, among other things, be utilized to capture CO2 directly from flue gas streams, reducing emissions and pollution into the atmosphere. Conjointly, our biomass production technologies can be utilized for the controlled, high-rate production of algae, which in turn can be utilized as feedstock for energy production, including fuels and electricity, as well as for other bioproducts.
Carbon Capture, Storage, Biosequestration and Reutilization
Our technologies can be used to capture and store CO2. CO2 may be captured using a variety of techniques, and once captured, the CO2 can be permanently stored, or sequestered, to avoid future release into the atmosphere.
Primary existing pathways to carbon sequestration include existing geological, biological and chemical methods. Geological sequestration may be accomplished by storing CO2 in geological formations, including underground reservoirs. This method faces significant limitations and potential liabilities as storage capacity is limited and the non-trivial scenario of an accidental high pressure leak or rock penetration could be catastrophic.
Chemical sequestration is also problematic as it is expensive and the energy requirement to complete this process is enormous. Biological sequestration methods, which include the use of forests, plankton and other photosynthetic organisms to sequester CO2, have also for the most part been inefficient to date.
Biosequestration systems, however, offer the unique potential to overcome many of the independent hurdles faced by other sequestration methodologies and have emerged as a significant commercial opportunity.
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We believe that a significant environmental benefit of algae biomass production is the potentially meaningfully contribution to the reduction of CO2 emissions through large-scale carbon dioxide biosequestration.
Algae Production
Algae are aquatic plants that reproduce rapidly during photosynthesis, requiring a significant input of carbon dioxide for growth, as well as light energy, water, and nutrients, and releasing oxygen in the process. Algae production can be used to sequester carbon dioxide on a large scale, reducing pollution and generating carbon credits where applicable.
Once cultivated, algae biomass can be utilized to produce energy and other bioproducts.
Algae contain vegetable oil, with the percentage of biomass dry weight, concentration, and quality depending on species. This oil can be extracted from algae using a variety of techniques and used as a feedstock in the production of biodiesel, gasoline, jet fuel, plastics and solvents, among other things. We believe that any CO2 released in the production of biofuels could be captured utilizing our capture technologies, for utilization in the production of new algae.
Residual algal biomass, following any extraction of vegetable oil, consists of protein and carbohydrates that can be utilized in the production of certain bioproducts, including as a certain fish, animal and/or poultry feed ingredient, fertilizer, and material for ethanol or methanol production, among other things.
Dry algae biomass, regardless of oil content, can also be used to produce electricity, through incineration or anaerobic digestion. Anaerobic digestion refers to the process by which organic waste is converted or digested into methane gas, which is then utilized to power turbines, thereby generating electricity.
Algae biomass could be utilized as a supplemental biodegradable waste to such a facility. We believe that any CO2 released in the burning of methane or production of electricity could be captured utilizing our capture technologies, for utilization in the production of new algae.
Algae energy systems provide the ability to produce renewable fuels while recycling carbon in a manner that is efficient, affordable and environmentally stable, addressing and overcoming significant challenges facing the United States and other industrialized countries.
To date, most existing commercial algae biomass production systems are centered on mechanized bioreactors or pond-based systems, and in addition to being costly and, in our view, inefficient, have faced the following three primary limitations:
1. The efficient large-scale delivery of CO2. CO2 has limited physical solubility in water. This can be observed in carbonated beverages, where CO2 bubbles to the surface of the soft drink and escapes into the atmosphere.
Existing bioreactor and pond technologies may attempt to increase the supply of CO2 available for algae consumption by boosting CO2 pressures in water. This is accomplished by pumping or bubbling CO2 through the nutritional media. This method typically results in low biosequestration efficiency, as the majority of gas pumped through the water cannot be absorbed fast enough by the algae and is released into the atmosphere.
Another CO2 delivery approach is to pressurize CO2 essentially attempting to force-feed CO2 to algae in an unnatural way through increase partial pressure. This method typically results in low biosequestration efficiency, as it creates condition where algae are unable to naturally ingest and utilize much of the CO2 for its growth.
2. The availability of light energy. Algae require a reliable source of light energy, or photons, for growth. In door bioreactors and synthetic lighting systems are capital-intensive and costly.
3. The deleterious presence of oxygen in the algae growth cycle. The presence of oxygen negatively affects algae growth, as oxygen is deleterious to algae growth. To stimulate optimal growth conditions, oxygen released by algae during photosynthesis must be displaced from the algae growth site. Certain existing mechanical displacement systems are capital-intensive and costly.
Many of the limitations above can be addressed by open water algae production systems, which represent the most promising solution for scalable energy feedstock production while recycling carbon in a manner that is efficient, affordable and environmentally stable. In an open-water environment, nature can recycle water and nutrients required for algae growth through natural tidal exchange, while the sun provides light free of charge, keeping algae production costs low.
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That said, competing algae production technologies have not been focused around open water production, a primary reason being the challenges associated with supplying CO2 to open-water platform algae efficiently and in a large scale.
We believe our technologies can enable industrial scale open water algae production, which we believe is a competitive advantage.
We believe our technologies can lower the cost of biomass production, boost the growth rate of biomass, and increase the efficiency of production.
We believe our technologies can be integrated with existing carbon emitters, energy producers, water treatment plants, anaerobic digestion facilities, manufacturers, and transportation companies, among others, depending on a variety of factors.
We have not established any commercial facilities to date.
Products and Customers
We plan to design and construct carbon dioxide capture and algae biomass production equipment sets to the specifications of clients.
Our primary target clients include existing anaerobic digestion facility manufacturers and operators. An anaerobic digestion facility, also known as an anaerobic digester, is a waste management facility that uses microorganisms to break down biodegradable material (such as manure, food processing waste and algae, among other biodegradable materials), producing a biogas that typically consists of a mixture of carbon dioxide and methane, among other gases. The methane can be combusted to release energy and generate electricity as a source of renewable energy.
A common problem that anaerobic digestion facilities often face is that excess biogas not used on-site for energy purposes is typically flared and wasted. The reason for this is that excess methane produced by an anaerobic digester that is unable to be utilized immediately for power purposes cannot be compressed and stored for future transport or use due to its mixture with other gases, including carbon dioxide.
We believe our proprietary carbon dioxide removal systems can be customized and installed to process biogas produced by existing anaerobic digester facilities and remove carbon dioxide from the biogas. Once carbon dioxide has been removed from the biogas, the mixture of methane can be more easily compressed and stored for future transport or use, providing anaerobic digestion facilities an increased source of revenue through the ability to potentially sell this storable methane which may previously have been flared and wasted.
We also offer proprietary algae biomass production systems designed to utilize captured or otherwise sourced carbon dioxide for the controlled, localized production of algae. We believe our proprietary algae biomass systems can be used to transfer carbon dioxide, captured using our carbon capture systems or otherwise, to algae. We believe our proprietary algae production systems can assist algae growth.
We intend to earn revenues by leasing our carbon dioxide removal and algae biomass production equipment through monthly and annual operating leases, as well as through the sale of such equipment to our customers. We also seek to generate revenues through training and maintenance services, or through sublicensing agreements. We are unable to accurately estimate the potential costs or revenues associated with our carbon capture systems or algae biomass production systems until we conduct our feasibility study.
Algae can also be supplied to anaerobic digesters as feedstock to increase biogas and energy production for an anaerobic digester facility accepting algae. As part of our product offering, we will also seek to oversee the installation of an anaerobic digestion facility by obtaining exclusivity agreements for digesters, and then subcontracting the installation to experience anaerobic digester manufacturers while ensuring that any such installation incorporates our technologies. Under this scenario, we intend to generate revenue through subcontracting the anaerobic digester installation while generating additional potential revenues through the sale of our carbon capture and algae biomass production equipment to the project. We are unable to accurately predict our potential for revenues under this model until we complete our feasibility study.
We believe that other waste management and renewable energy companies can be potential customers for our technologies, but have not established a specific business plan with respect to those customers at this time.
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Benefits of Algae Fuels vs. Other Feedstock Sources
The need for the development of reliable, sustainable, environmentally-friendly alternatives to petroleum fuels is significant and immediate. Global demand for petroleum has been growing at a rate that exceeds improvements in production, and as a finite natural resource, the available supply of petroleum is depleted each day. Petroleum products are also harmful to the environment and introduce carbon dioxide (CO2) and other pollutants into the atmosphere when burned.
While numerous alternative energy solutions are being developed—including wind and solar, as well as other crop-based fuels (such as biofuel from corn or soybeans)—most face structural limitations and we believe none offer the scalability potential and promise for true energy independence as algae-based biofuels.
Algae is Renewable, Sustainable and Multiplies Rapidly
Algae reproduce by cellular division, can multiply rapidly and under the right conditions can double several times per day. These rapid growth rates enable production of feedstock on a scale impossible from other feedstock sources.
Algae Oil Does Not Require Arable Land or Compete with the Food Supply
Algae production does not compete with arable land, leaving farmland and rainforests free from adverse impact. The ethanol boom has diverted arable land and food supplies toward energy alternatives, which may have contributed to a rise in corn, soybean and consumer prices as well as unfavorable volatility in the commodity markets and food supplies globally. As algae are not presently a major human food source, producing it for biofuels does not take away from the food supply.
Algae can be Produced Close to End User
We believe that algae can be produced near heavily populated coastal areas, as opposed to the central United States, such as is the case with certain crop-based feedstock sources. The result is lower transportation costs for delivery to the end user. Coupled with algae’s general scalability, we believe algae-based oils can ultimately maintain a price advantage over food-based oils presently used in biodiesel production.
Algae Absorb CO2 While Simultaneously Releasing Oxygen during Growth
Algae grow through photosynthesis by absorbing CO2 as a nutrient and producing oxygen in exchange. Because algae absorbs CO2 rather than releases it during the production process, algae production is environmentally friendly, can meaningfully reduce carbon emissions and, where applicable, potentially generate carbon credits which may in the future serve as a source of revenue.
Algae Oil is Clean and Energy Efficient to Produce
Petroleum is a heavy pollutant that contains sulfur and other toxins. Petroleum drilling operations themselves can also be highly noxious, as refineries produce heavy pollutants and crude spills can become environmental catastrophes. By contrast, algae oil generates minimal greenhouse gases compared to conventional carbon fuels. Our algae production process itself is also believed to be environmentally friendly.
Algae Oil is Compatible with Existing Refineries and Distribution System
Unlike other alternatives to petroleum, which may bypass the existing refining infrastructure, algae oil technology is believed to enable the production of fuels fully compatible with existing infrastructure. The petroleum industry has demonstrated support for the refining of biofuels, and we believe algae oil can be used as a feedstock and petroleum substitute in the production of biodiesel, jet fuel and gasoline, among other fuels.
Algae is Flexible on Water Quality
Many species of algae thrive in seawater, water from saline aquifers or even wastewater from treatment plants. Because certain algae do not require fresh water to thrive, they do not compete for limited supplies of fresh water.
Algae Biomass Has Other Uses
The residual biomass following oil extraction, which consists of a protein and carbohydrates, can be used as a fish, animal and poultry feed ingredient, fertilizer, material for ethanol or methanol production, cosmetics, pharmaceuticals and dyes, among other “green” products.
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Dry residual biomass (with or without oil content) can also be utilized for the production of electric energy, through incineration or anaerobic digestion, or both.
We believe there can be minimal waste from a biomass harvest, with different components of the total harvest utilized for various purposes, including the production of specific bioproducts.
Algae Stimulates Economic Development
As developed and developing nations continue to look for ways to spur economic development, algae-based industries and innovation can provide substantial, tangible benefits to an economy, including the creation of jobs, improvement in security and reduction in dependence on imported oil, a potential increase in local tax revenues, and other benefits.
Insurance Policies
We do not maintain any insurance policies.
Employees
We are a development stage company and currently have no full time employees. We have two part-time employees, which consist of our President and CEO (Mr. Recachinas) and our Chief Scientific Officer (Dr. Chirkov).
Offices
Our executive offices are located at 10 Dorrance Street, Suite 700, Providence, Rhode Island 02093. Our primary telephone number is 401-400-0028. We lease the foregoing offices from Regus Management Group, pursuant to a virtual office lease agreement dated August 12, 2012. Our monthly rent is $99, for which we receive access to certain workspace solutions and services.
| ITEM 1. | RISK FACTORS. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| ITEM 2. | PROPERTIES. |
The only real or personal property we own are the intellectual property licenses and related assets we’ve acquired relating to carbon capture, carbon sequestration and industrial algae-for-biofuels technologies (Note 3).
| ITEM 3. | LEGAL PROCEEDINGS. |
We are not presently a party to any litigation.
| ITEM 4. | MINE SAFETY DISCLOSURES. |
Not Applicable.
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PART II
| ITEM 5. | MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Our common stock commenced trading on the over-the-counter Bulletin Board on October 7, 2009. It currently trades under the symbol “HDSI”. Following is a table of the high bid price and the low bid price for each quarter during the last two years.
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2013
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High Bid
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Low Bid
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First Quarter, Ending March 31
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$ | 0.0047 | $ | 0.0037 | ||||
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Second Quarter, Ending June 30
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$ | 0.0027 | $ | 0.0027 | ||||
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Third Quarter, Ending September 30
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$ | 0.0022 | $ | 0.0022 | ||||
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Fourth Quarter, Ending December 31
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$ | 0.0014 | $ | 0.0014 | ||||
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2012
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High Bid
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Low bid
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First Quarter, Ending March 31
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$ | 0.149 | $ | 0.01 | ||||
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Second Quarter, Ending June 30
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$ | 0.006 | $ | 0.009 | ||||
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Third Quarter, Ending September 30
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$ | 0.01 | $ | 0.0037 | ||||
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Fourth Quarter, Ending December 31
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$ | 0.008 | $ | 0.0030 | ||||
Holders
As of March 31, 2014, we had 377,203,075 shares of our common stock issued and outstand held by approximately seven stockholders of record; this figure does not include any shareholders electing to beneficially own their shares through nominees such their stock broker or other financial institution. We have 7,500,000 shares of our Class A Preferred Stock issued and outstanding and no shares of our Preferred Stock issued and outstanding.
Dividends
We have never declared or paid cash dividends. We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our directors.
Status of Our Public Offering
On November 15, 2013, our Post-Effective Amendment to our Form S-1 Registration Statement (SEC file no. 333-182573) was declared effective by the SEC. Pursuant to the Post-Effective Amendment to our Form S-1 Registration Statement, we are offering no minimum, 50,000,000 shares of common stock maximum at an offering price of $0.005 per share in a direct public offering, without any involvement of underwriters or broker-dealers. As of March 31, 2013, we have not sold any shares in our public offering.
Securities Authorized for Issuance Under Equity Compensation Plans
On July 18, 2012 a Registration Statement on Form S-8 (the “Registration Statement”) was filed by us together with our 2012 Non-Qualified Stock Option Plan (the “Plan”) relating to 30,000,000 shares of our common stock, par value $0.001 per share, to be offered and sold to accounts of eligible persons.
Equity Compensation Plan
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Plan category
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Number of securities issued upon exercise of outstanding options, warrants and rights
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Weighted-average exercise
price of outstanding options,
warrants and rights
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Number of securities remaining available for future issuance under equity compensation plans (excluding
securities reflected in column (a))
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders
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0 | 0 | 0 | ||||||||
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Equity compensation plans not approved by security holders
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0 | 0 | 30,000,000 | ||||||||
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Total
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0 | 0 | 30,000,000 | ||||||||
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Penny Stock Regulations and Restrictions on Marketability
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws, (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price, (d) contains a toll-free telephone number for inquiries on disciplinary actions, (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks, and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock, (b) the compensation of the broker-dealer and its salesperson in the transaction, (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock, and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling their shares of our common stock.
Common Stock
Our Articles of Incorporation authorize us to issue up to 2,000,000,000 shares of common stock, $0.001 par value. Each holder of our common stock is entitled to one (1) vote for each share held of record on all voting matters we present for a vote of stockholders, including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to our common stock. All shares of our common stock are entitled to share equally in dividends from sources legally available when, and if, declared by our Board of Directors.
Our Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.
In the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available for distribution to stockholders. However, the rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of preferred stock that have been issued or shares of preferred stock that our Board of Directors may decide to issue in the future.
As of March 31, 2014, we had 377,203,075 shares of common stock issued and outstanding.
Preferred Stock
Our Articles of Incorporation authorize us to issue up to 50,000,000 shares of preferred stock, $0.001 par value. Of the 50,000,000 authorized shares of preferred stock, the total number of shares of Class A Preferred Shares the Corporation shall have the authority to issue is Twenty Five Million (25,000,000), with a stated par value of $0.001 per share. Our Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms. We believe that the Board of Directors’ power to set the terms of, and our ability to issue, preferred stock will provide flexibility in connection with possible financing or acquisition transactions in the future. The issuance of preferred stock, however, could adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders. The presence of outstanding preferred stock could also have the effect of delaying, deterring or preventing a change in control of our company.
- 10 -
As of March 31, 2014, we had no shares of our preferred stock issued or outstanding, and 7,500,000 shares of our Class A preferred stock issued and outstanding.
Options
We have not issued and do not have outstanding any options to purchase shares of our stock.
Registration Rights
As of March 25, 2014, there are no other outstanding registration rights or similar agreements.
Convertible Securities
Asher Enterprises, Inc.
On June 7, 2014, we entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 1”) in the principal amount $32,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher Enterprises, Inc. (“Asher”), a Delaware corporation, and HDS International Corp. The Asher Note 1 closed on July 19, 2013 and matures on December 7, 2014. The Asher Note 1 is convertible at 50% of the average of the lowest five trading prices of HDS International’s common stock during the thirty trading day period prior to the conversion date after 180 days. HDS International analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
On July 15, 2013 we entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 2”) in the principal amount $27,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher and HDS International Corp. The Asher Note 2 closed on July 19, 2013 and matures on January 16, 2015. The Asher Note 2 is convertible at 58% of the average of the lowest five trading prices of HDS International’s common stock during the thirty trading day period prior to the conversion date after 180 days. HDS International analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
On October 4, 2013 we entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 3”) in the principal amount $32,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher and HDS International. The Asher Note 3 closed on October 22, 2013 and matures on July 8, 2015. The Asher Note 3 is convertible at 50% of the average of the lowest five trading prices of HDS International’s common stock during the ten trading day period prior to the conversion date after 180 days. HDS International analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
On February 18, 2014, we entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 4”) in the principal amount $15,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher and HDS International. The Asher Note 4 closed on February 27, 2014 and matures on August 20, 2015. The Asher Note 4 is convertible at 50% of the average of the lowest five trading prices of HDS International’s common stock during the ten trading day period prior to the conversion date after 180 days. HDS International analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
Asher Note 1, Asher Note 2. Asher Note 3 and Asher Note 4 (collectively, “Asher Notes”) are convertible into shares of our common stock based upon a discount to the market price. The conversion terms of these convertible notes are based upon a discount to the then-prevailing average of the five (5) lowest trading bid prices and, as a result, the lower the stock price at the time Asher converts the convertible notes, the more shares of common stock Asher will receive. The number of shares of common stock issuable upon conversion of these convertible notes is indeterminate. If the trading price of our common stock is lower when the conversion price of these convertible notes is determined, we would be required to issue a higher number of shares of our common stock, which could cause substantial dilution to our stockholders. In addition, if Asher opts to convert these convertible notes into
shares of our common stock and sell those shares it could result in an imbalance of supply and demand for our common stock and resulting in lower trading prices for our common stock as reported by the OTCBB. The further our stock price declines, the further the adjustment of the conversion price will fall and the greater the number of shares we will have to issue upon conversion.
- 11 -
In addition, the number of shares issuable upon conversion of the convertible note is potentially limitless. While the overall ownership of Asher at any one moment may be limited to 9.99% of the issued and outstanding shares of our common stock, Asher may be free to sell any shares into the market that have previously been issued to them, thereby enabling them to convert the remaining portion of these convertible notes.
On December 19, 2012, the Company exercised its right to convert all $520,055 of principal and accrued interest under the August 18, 2011 promissory notes into 2,080,220 restricted shares of the Company’s common stock and the promissory note terminated.
On November 26, 2012, we entered into a settlement agreement and general release (the “Restructuring Agreement”) with holders of convertible drawdown promissory notes (the “Notes”) issued on June 29, 2012. Under the terms of the Notes, $60,000 was lent to us on June 29, 2012 with $90,000 to be lent to us on or before August 3, 2012. The note holders failed to make the second loan of $90,000 to us and were in default under the Notes. Under the Restructuring Agreement, we have resolved and settled any and all disputes and claims arising from the Notes; the Notes and any interest accrued there under was cancelled, set aside, and held for naught; and the amount due the note holders was converted to 17,142,855 restricted shares of our common stock. The convertible drawdown promissory notes issued on June 29, 2012 were terminated on November 26, 2012.
On June 29, 2012, the Company issued convertible debentures to non-related parties for $150,000, comprised of payments of $60,000 on June 29, 2012, and $90,000 due August 3, 2012. Under the terms of the note, the amount owing is unsecured, due interest of 6% per annum, and due on or before December 31, 2013.
The convertible debentures also provide that, so long as the lender is not in default, either party shall have the right to convert all or a portion of the outstanding principal and accrued interest into fully paid and non-assessable shares of our common stock at the rate of one restricted share of common stock for each $0.01 owed.
On August 18, 2011, the Company issued a convertible debenture to a non-related party for $500,000, comprised of payments of $100,000 on August 19, 2011, $150,000 on August 26, 2011, and $250,000 on September 6, 2011. Under the terms of the note, the amount owing is unsecured, due interest of 3% per annum, and due on or before February 19, 2013. As at March 31, 2012, accrued interest of $9,288 has been recorded in accrued liabilities.
The convertible debenture also grants the right of the Company to convert this debt into common shares of the Company at any time at a conversion price of $0.25 per share. For the first payment of $100,000 on August 19, 2011, the Company recorded beneficial conversion of $16,800 relating to the number of convertible shares (400,000 shares) and the excess of the fair value of the share price and the conversion price. No beneficial conversion was recorded for the $150,000 and $250,000 payments, as the fair value of the Company’s share prices was less than the conversion price on the date of issuance. As at September 30, 2012, the Company recorded accumulative accretion expense of $12,437 with a corresponding credit to the long-term note payable.
The 7,500,000 issued and outstanding shares of Class A Preferred Stock are convertible into shares of common stock at a rate of 20 common shares for each Class A Preferred Share converted. If all of our Class A Preferred Stock was converted into shares of common stock, the number of issued and outstanding shares of common stock of the Company would increase by 150,000,000.
Shares Eligible for Future Sale
As of March 31, 2014, we had 377,203,075 shares of our common stock issued and outstanding, a breakdown of which follows:
|
●
|
197,753,075 are freely tradable without restrictions (commonly referred to as the “public float”)
|
|
●
|
179,450,000 are currently subject to the restrictions and sale limitations imposed by Rule 144.
|
- 12 -
From time to time, certain of our stockholders may be eligible to sell some or all of their restricted shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain volume restrictions and restrictions on the manner of sale. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale, current public information and notice requirements.
The eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect prevailing market prices for our securities and cause you to lose most, if not all, of your investment in our business.
Transfer Agent
Action Stock Transfer Corp.
2469 East Fort Union Boulevard, Suite 214
Salt Lake City, Utah 84121
(801) 274-1088 Phone
(801) 274-1099 Fax
info@actionstocktransfer.com Email
Recent Sales of Unregistered Securities
The only issuance and sales of securities without registration since March 28, 2013 through March 31, 2014 comprise the transactions relating to the Asher Notes, as described above.
Purchases of Equity Securities by the Issuer and Affiliated Purchases
During each month within the fourth quarter of the fiscal year ended December 31, 2013, neither we nor any “affiliated purchaser”, as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.
| ITEM 6. | SELECTED FINANCIAL DATA. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. |
Forward Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
We are considered a start-up corporation. Our auditors have issued a going concern opinion on the consolidated financial statements for the year ended December 31, 2013.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we complete the development of our website, source out suppliers for products to sell and source out customers to buy our products. We believe the technical aspects of our websites will be sufficiently developed to use for our operations 60 days from the completion of our offering. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and begin our operations. We will not begin operations until we raise money from our public offering.
- 13 -
To meet our need for cash we are attempting to raise money from our public offering. We believe that we will be able to raise enough money through our public offering to begin operations but we cannot guarantee that once we begin operations we will stay in business after operations have commenced. Regardless of the amount of money we raise in our public offering, we believe we will have sufficient cash to maintain operations during the next twelve months.
If we are unable to generate revenues as expected we believe we will be able to meet our cash requirements for the twelve months following the completion of our public offering, if we raise the maximum amount. If we fail to raise any funds and are unable to achieve revenues, as expected, we believe we will be able to meet our cash requirements for the next three month and we will need to find alternative sources, like a second public offering, a private placement of securities, or loans from our officers or others, in order for us to maintain our operations. At the present time, we have not made any arrangements to raise additional cash, other than through our public offering.
If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash, or cease operations entirely.
We will be responsible for the outstanding offering expenses regardless of the outcome of our public offering.
Hardware is comprised of office equipment and computers for desktop use, as well as materials needed to construct product prototypes. If we raise at least $50,000, we will purchase office communications equipment, including one computer. If the maximum is raised, we will purchase three desktop computers and materials to construct a carbon dioxide removal and reutilization platform prototype.
Assets will be purchased from unaffiliated third parties at the market price for the assets. As of the date hereof, we have not identified the persons from whom we will purchase the assets.
Website costs are related to developing our websites. Our corporate website will cost $2,000 to update. If $250,000 is raised, we will be able to incorporate additional functionality to the website for a total cost of $5,625.
Marketing and advertising is related to the design and purchase of various types of marketing materials and brochures which will promote our services to customers. If the maximum is raised, we can purchase large banners and other professional quality posters to display at trade shows and other similar functions.
If we raise $250,000 from our public offering, we intend to pay two business development personnel and two scientists/engineers.
Working capital is the cost related to operating our office. It is comprised of expenses for telecommunications, mail, stationary, accounting, acquisition of office equipment and supplies, expenses of filing reports with the SEC, travel, and general working capital.
If we do not raise any money in our public offering, we may not be able to maintain our operations during the next twelve months and our plan for growth will be hampered.
We will not receive any proceeds from the sale of the shares of common stock by the selling shareholders. All proceeds from the sale of shares of common stock by selling shareholders will be received by the selling shareholders.
Plan of Operation – Milestones
The Company is only in the beginning stages of being able to access the renewable energy and eco-sustainability marketplace.
Over the next twelve months, our primary target milestones include:
1. Entering into employment agreements with our Chief Scientific Officer (Dr. Alexander Chirkov), our President (Tassos D. Recachinas), and at least one other senior executive. We plan to conduct an executive search to identify an experienced executive with relevant technology and business experience to join our team. We expect all three formal employment agreements to cost us approximately $800,000 in cash.
- 14 -
2. Entering into a contract with at least one corporation to implement our carbon capture technology utilizing their infrastructure. We expect the business development and any subsequent implementation effort to cost us approximately $300,000.
3. Applying for at least one grant opportunity per quarter, from a Federal or U.S. State-sponsored organization or entity. We expect grant writing expenses, including those associated with consultants, to total approximately $50,000.
4. We note that the above milestones are the same milestones that we identified for the year ended December 31, 2013. We did not achieve these milestones during the preceding twelve months, primarily attributed to insufficient funding. We continue to seek additional funds for our operations, through our public offering as described above, and otherwise.
Limited operating history; need for additional capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are in a start-up stage operations and have not generated any 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 and products.
Results of Operations – December 31, 2013 as compared to December 31, 2012
Working Capital
|
December 31, 2013
$
|
December 31, 2012
$
|
|||||||
|
Current Assets
|
3,371 | 12,650 | ||||||
|
Current Liabilities
|
941,903 | 476,951 | ||||||
|
Working Capital (Deficit)
|
(938,532 | ) | (464,301 | ) | ||||
Cash Flows
|
For the year ended
December 31, 2013
$
|
For the year ended
December 31, 2012
$
|
|||||||
|
Cash Flows from (used in) Operating Activities
|
(103,304 | ) | (402,528 | ) | ||||
|
Cash Flows from (used in) Investing Activities
|
– | – | ||||||
|
Cash Flows from (used in) Financing Activities
|
94,025 | 95,000 | ||||||
|
Net Increase (decrease) in Cash During Period
|
(9,279 | ) | (307,528 | ) | ||||
Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
Operating expenses for the year ended December 31, 2013 were $478,916 compared with $543,922 for the year ended December 31, 2012. The decrease in operating expenses was attributed to a decrease in general and administrative expense of $54,533 for day-to-day operating costs and professional fees of $18,813 due to a decrease in legal expenses incurred during the current year offset by an increase in consulting fees of $8,750.
During the year ended December 31, 2013, the Company recorded a net loss of $570,443 compared with a net loss of $644,602 for the year ended December 31, 2012. In addition to the above, the Company incurred an increase of $1,465 of interest expense relating to debt balances, $45,521 loss on change in fair value of derivative liability, offset by a decrease of $12,669 of accretion expense for the fair value of the beneficial conversion feature on the convertible note issued in August 2011 and a decrease in the loss on settlement of debt of $43,470.
Liquidity and Capital Resources
As at December 31, 2013, the Company’s cash balance consisted of $3,371 compared to cash balance of $12,650 as at December 31, 2012. The decrease in the cash balance was attributed the use of cash during the year for day-to-day activities. As at December 31, 2013, the Company’s total assets consisted of $10,056 compared to total assets of $12,650 as at December 31, 2012. The decrease in total assets was attributed to the decrease in cash as noted above, offset by the addition of deferred financing costs related to the issuance of convertible debt during the year ended December 31, 2013.
- 15 -
As at December 31, 2013, the Company had total liabilities of $946,300 compared with total liabilities of $476,951 as at December 31, 2012. The increase in total liabilities is attributed to a $415,315 increase in accounts payable, as well as an increase in convertible debentures and derivative liability.
As at December 31, 2013, the Company has a working capital deficit of $938,532 compared with a working capital $464,301 at December 31, 2012 with the increase in the working capital attributed to decrease in cash used to fund day-to-day activities and an increase in accounts payable due to the low cash balance held at year end as well as due to the convertible debentures and derivative liability issued and recorded during the year.
Cashflow from Operating Activities
During the year ended December 31, 2013, the Company used $103,304 of cash for operating activities compared to the use of $402,528 of cash for operating activities during the year ended December 31, 2012. The decrease in the use of cash for operating activities was attributed to the fact that the Company had more outstanding and current obligations at year end to conserve cash.
Cashflow from Investing Activities
During the years ended December 31, 2013 and 2012, the Company did not conduct any investing activities.
Cashflow from Financing Activities
During the year ended December 31, 2013, the Company received $94,024 of proceeds from financing activities compared to $95,000 during the year ended December 31, 2012. The decrease in proceeds from financing activities was due to receipt of $60,000 in debt financing received during the prior year, as well as $35,000 from the proceeds of issuance of common stock, compared to the receipt of $83,000 from issuance of convertible debt and $11,025 from related parties in current year
Subsequent Developments
None.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited consolidated financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant 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 are material to stockholders.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
- 16 -
Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notes to our consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
HDS International Corp.
(A Development Stage Company)
December 31, 2013 and 2012
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated Balance Sheets
|
F-2
|
|
Consolidated Statements of Operations
|
F-3
|
|
Consolidated Statement of Stockholders’ Deficit
|
F-4
|
|
Consolidated Statements of Cash Flows
|
F-5
|
|
Notes to the Consolidated Financial Statements
|
F-6
|
- 17 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
HDS International Corp.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of HDS International Corp (a Development Stage Company) as of December 31, 2013 and 2012 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended and for the period from November 3, 2008 (inception) through December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HDS International Corp. as of December 31, 2013 and 2012, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company suffered a net loss from operations and has a working capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
M&K CPAS, PLLC
M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
April 7, 2014
F-1
- 18 -
HDS International Corp.
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars)
|
December 31,
2013
$
|
December 31,
2012
$
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
3,371 | 12,650 | ||||||
|
Total Current Assets
|
3,371 | 12,650 | ||||||
|
Other Assets
|
||||||||
|
Deferred financing costs
|
6,685 | – | ||||||
|
Total Assets
|
10,056 | 12,650 | ||||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
449,022 | 119,732 | ||||||
|
Accounts payable and accrued liabilities – related parties
|
143,244 | 57,219 | ||||||
|
Due to related parties
|
300,000 | 300,000 | ||||||
|
Convertible debentures, net of unamortized discount of $28,384 and $nil, respectively
|
4,116 | – | ||||||
|
Derivative liability
|
45,521 | – | ||||||
|
Total Current Liabilities
|
941,903 | 476,951 | ||||||
|
Non-Current Liabilities
|
||||||||
|
Convertible debentures, net of unamortized discount of $55,603 and $nil, respectively
|
4,397 | – | ||||||
|
Total Liabilities
|
946,300 | 476,951 | ||||||
|
Stockholders’ Deficit
|
||||||||
|
Preferred Stock
Authorized: 25,000,000 preferred shares, with a par value of $0.001 per share
Issued and outstanding: nil preferred shares
|
– | – | ||||||
|
Class A Preferred Stock
Authorized: 25,000,000 preferred shares, with a par value of $0.001 per share
Issued and outstanding: 7,500,000 shares
|
7,500 | 7,500 | ||||||
|
Common Stock
Authorized: 2,000,000,000 common shares, with a par value of $0.001 per share
Issued and outstanding: 377,203,075 and 376,603,075 shares, respectively
|
377,203 | 376,603 | ||||||
|
Additional paid-in capital
|
381,775 | 283,875 | ||||||
|
Deficit accumulated during the development stage
|
(1,702,722 | ) | (1,132,279 | ) | ||||
|
Total Stockholders’ Deficit
|
(936,244 | ) | (464,301 | ) | ||||
|
Total Liabilities and Stockholders’ Deficit
|
10,056 | 12,650 | ||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-2
- 19 -
HDS International Corp.
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars)
|
Year ended
December 31,
2013
$
|
Year ended
December 31,
2012
$
|
Accumulated from
November 3, 2008
(date of inception)
to December 31,
2013
$
|
|||||||||
|
Revenue
|
– | – | – | ||||||||
|
Operating Expenses
|
|||||||||||
|
Consulting fees
|
420,500 | 411,750 | 1,012,750 | ||||||||
|
General and administrative
|
6,115 | 60,648 | 103,850 | ||||||||
|
Management fees
|
– | – | 43,727 | ||||||||
|
Professional fees
|
52,041 | 70,854 | 227,501 | ||||||||
|
Transfer agent fees
|
260 | 670 | 18,868 | ||||||||
|
Total Operating Expenses
|
478,916 | 543,922 | 1,406,696 | ||||||||
|
Income (Loss) Before Other Expenses (Income)
|
(478,916 | ) | (543,922 | ) | (1,406,696 | ) | |||||
|
Other Expenses (Income)
|
|||||||||||
|
Accretion expense
|
– | 12,669 | 16,800 | ||||||||
|
Impairment of intangible assets
|
– | – | 92,538 | ||||||||
|
Interest expense
|
46,006 | 44,541 | 122,249 | ||||||||
|
Loss on change in fair value of derivative liability
|
45,521 | – | 45,521 | ||||||||
|
Loss on settlement of debt
|
– | 43,470 | 18,918 | ||||||||
|
Total Other Expenses (Income)
|
91,527 | 100,680 | 296,026 | ||||||||
|
Net Income (Loss) for the Period
|
(570,443 | ) | (644,602 | ) | (1,702,722 | ) | |||||
|
Net Income (Loss) Per Share, Basic and Diluted
|
(0.00 | ) | (0.00 | ) | |||||||
|
Weighted Average Shares Outstanding
|
377,186,685 | 350,207,767 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements)
F-3
- 20 -
HDS International Corp.
(A Development Stage Company)
Consolidated Statement of Stockholders’ Deficit
For the Period from November 3, 2008 (Date of Inception) to December 31, 2013
(expressed in U.S. dollars)
|
Deficit
|
||||||||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||||||||
|
Additional
|
Stock
|
During the
|
||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Paid-in
|
Subscriptions
|
Development
|
||||||||||||||||||||||||||||
|
Amount
|
Amount
|
Capital
|
Receivable
|
Stage
|
Total
|
|||||||||||||||||||||||||||
| # | $ | # | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
|
Balance, November 3, 2008 (Date of Inception)
|
– | – | – | – | – | – | – | – | ||||||||||||||||||||||||
|
Issuance of shares for cash
|
– | – | 477,900,000 | 477,900 | (477,900 | ) | – | – | – | |||||||||||||||||||||||
| – | ||||||||||||||||||||||||||||||||
|
Issuance of shares for cash
|
– | – | 8,100,000 | 8,100 | (5,850 | ) | (23 | ) | – | 2,227 | ||||||||||||||||||||||
|
Net loss for the period
|
– | – | – | – | – | – | (5,212 | ) | (5,212 | ) | ||||||||||||||||||||||
|
Balance, December 31, 2008
|
– | – | 486,000,000 | 486,000 | (483,750 | ) | (23 | ) | (5,212 | ) | (2,985 | ) | ||||||||||||||||||||
|
Stock subscription receivable received
|
– | – | – | – | – | 23 | – | 23 | ||||||||||||||||||||||||
|
Issuance of shares for cash
|
– | – | 21,600,000 | 21,600 | (15,600 | ) | – | – | 6,000 | |||||||||||||||||||||||
|
Issuance of shares for cash
|
– | – | 5,400,000 | 5,400 | (3,900 | ) | – | – | 1,500 | |||||||||||||||||||||||
|
Net loss for the year
|
– | – | – | – | – | – | (18,191 | ) | (18,191 | ) | ||||||||||||||||||||||
|
Balance, December 31, 2009
|
– | – | 513,000,000 | 513,000 | (503,250 | ) | – | (23,403 | ) | (13,653 | ) | |||||||||||||||||||||
|
Issuance of shares for management fees
|
– | – | 25,200,000 | 25,200 | (18,200 | ) | – | – | 7,000 | |||||||||||||||||||||||
|
Forgiveness of loan
|
– | – | – | – | 2,649 | – | – | 2,649 | ||||||||||||||||||||||||
|
Net loss for the year
|
– | – | – | – | – | – | (145,094 | ) | (145,094 | ) | ||||||||||||||||||||||
|
Balance, December 31, 2010
|
– | – | 538,200,000 | 538,200 | (518,801 | ) | – | (168,497 | ) | (149,098 | ) | |||||||||||||||||||||
|
Shares cancelled
|
– | – | (440,820,000 | ) | (440,820 | ) | 440,820 | – | – | – | ||||||||||||||||||||||
|
Shares issued for acquisition of assets
|
7,500,000 | 7,500 | 250,000,000 | 250,000 | (499,962 | ) | – | – | (242,462 | ) | ||||||||||||||||||||||
|
Capital contribution
|
– | – | – | – | 200,751 | – | – | 200,751 | ||||||||||||||||||||||||
|
Beneficial conversion feature
|
– | – | – | – | 16,800 | – | – | 16,800 | ||||||||||||||||||||||||
|
Settlement of debt to related party
|
– | – | – | – | 14,965 | – | – | 14,965 | ||||||||||||||||||||||||
|
Net loss for the year
|
– | – | – | – | – | – | (319,180 | ) | (319,180 | ) | ||||||||||||||||||||||
|
Balance, December 31, 2011
|
7,500,000 | 7,500 | 347,380,000 | 347,380 | (345,427 | ) | – | (487,677 | ) | (478,224 | ) | |||||||||||||||||||||
|
Conversion of debt
|
– | – | 19,223,075 | 19,223 | 604,302 | – | – | 623,525 | ||||||||||||||||||||||||
|
Issuance of shares for cash
|
– | – | 10,000,000 | 10,000 | 25,000 | – | – | 35,000 | ||||||||||||||||||||||||
|
Net loss for the year
|
– | – | – | – | – | – | (644,602 | ) | (644,602 | ) | ||||||||||||||||||||||
|
Balance, December 31, 2012
|
7,500,000 | 7,500 | 376,603,075 | 376,603 | 283,875 | – | (1,132,279 | ) | (464,301 | ) | ||||||||||||||||||||||
|
Issuance of shares for consulting fees
|
– | – | 600,000 | 600 | 5,400 | – | – | 6,000 | ||||||||||||||||||||||||
|
Fair value of beneficial conversion feature recorded on issuance of convertible debt
|
– | – | – | – | 92,500 | – | – | 92,500 | ||||||||||||||||||||||||
|
Net loss for the year
|
– | – | – | – | – | – | (570,443 | ) | (570,443 | ) | ||||||||||||||||||||||
|
Balance, December 31, 2013
|
7,500,000 | 7,500 | 377,203,075 | 377,203 | 381,775 | – | (1,702,722 | ) | (936,244 | ) | ||||||||||||||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-4
- 21 -
HDS International Corp.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
|
Year ended
December 31,
2013
$
|
Year ended
December 31,
2012
$
|
Accumulated from
November 3, 2008
(date of inception)
to December 31,
2013
$
|
|||||||||
|
Operating Activities
|
|||||||||||
|
Net Income (Loss)
|
(570,443 | ) | (644,602 | ) | (1,702,722 | ) | |||||
|
Adjustment to reconcile net loss to net cash used in operating activities:
|
|||||||||||
|
Accretion of debt discount
|
8,513 | 12,669 | 25,313 | ||||||||
|
Amortization of deferred financing costs
|
2,815 | – | 2,815 | ||||||||
|
Impairment of intangible assets
|
– | – | 92,538 | ||||||||
|
Loss on change in fair value of derivative liability
|
45,521 | – | 45,521 | ||||||||
|
Loss on settlement of debt
|
– | 43,470 | 18,918 | ||||||||
|
Shares issued for management and consulting fees
|
6,000 | – | 13,000 | ||||||||
|
Stock-based compensation
|
– | – | 2,227 | ||||||||
|
Changes in operating assets and liabilities:
|
|||||||||||
|
Prepaid expense and deposits
|
– | 7,575 | – | ||||||||
|
Accounts payable and accrued liabilities
|
329,290 | 133,278 | 496,629 | ||||||||
|
Accounts payable and accrued liabilities – related parties
|
75,000 | 45,082 | 132,219 | ||||||||
|
Due to related parties
|
– | – | 11,965 | ||||||||
|
Net Cash Used in Operating Activities
|
(103,304 | ) | (402,528 | ) | (861,577 | ) | |||||
|
Investing activities
|
|||||||||||
|
Acquisition of intangible assets
|
– | – | (10,000 | ) | |||||||
|
Net Cash Used by Investing Activities
|
– | – | (10,000 | ) | |||||||
|
Financing activities
|
|||||||||||
|
Proceeds from convertible debenture
|
83,000 | – | 83,000 | ||||||||
|
Proceeds from loan payable
|
– | 60,000 | 709,600 | ||||||||
|
Repayments of loan payable
|
– | – | (149,449 | ) | |||||||
|
Proceeds from related parties
|
11,025 | – | 13,674 | ||||||||
|
Repayments to related parties
|
– | – | (25,000 | ) | |||||||
|
Capital contribution
|
– | – | 200,600 | ||||||||
|
Proceeds from the issuance of common stock
|
– | 35,000 | 42,523 | ||||||||
|
Net Cash Provided by Financing Activities
|
94,024 | 95,000 | 874,948 | ||||||||
|
Increase (Decrease) in Cash
|
(9,279 | ) | (307,528 | ) | 3,371 | ||||||
|
Cash, Beginning of Period
|
12,650 | 320,178 | – | ||||||||
|
Cash, End of Period
|
3,371 | 12,650 | 3,371 | ||||||||
|
Supplemental Disclosures
|
|||||||||||
|
Interest paid
|
– | – | – | ||||||||
|
Income tax paid
|
– | – | – | ||||||||
|
Non-cash investing and financing activities
|
|||||||||||
|
Debt discount due to beneficial conversion feature
|
92,500 | – | 92,500 | ||||||||
|
Forgiveness of related party debt
|
– | – | 2,649 | ||||||||
|
Issuance of common shares to settle debt
|
– | – | 580,055 | ||||||||
|
Issuance of common shares for acquisition of assets
|
– | 250,000 | 250,000 | ||||||||
|
Issuance of preferred shares for acquisition of assets
|
– | 7,500 | 7,500 | ||||||||
|
Issuance of note payable for acquisition of assets
|
– | 325,000 | 325,000 | ||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-5
- 22 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
|
1.
|
Nature of Operations and Continuance of Business
|
HDS International Corp. (the “Company”) was incorporated on November 3, 2008 under the laws of the State of Nevada. A substantial portion of the Company’s activities has involved developing a business plan and establishing contacts and visibility in the marketplace and the Company has not generated any revenue to date. The Company plans to engage in the business of providing renewable energy and eco-sustainability solutions based on its licensed technologies.
On June 11, 2012, HDS Energy and Ecosystems NB, Ltd., the Company’s wholly owned subsidiary, was incorporated in the Province of New Brunswick, Canada to manage the operations and other business development efforts.
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As of December 31, 2013, the Company had a working capital deficiency of $938,532 and an accumulated deficit of $1,702,722. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. .
2. Summary of Significant Accounting Policies
|
a)
|
Principles of Consolidation
|
The consolidated financial statements for the years ending December 31, 2013 and 2012 include the accounts of HDS International Corp. and HDS Energy and Ecosystems NB, Ltd., the Company’s wholly owned subsidiary effective June 11, 2012. All intercompany transactions and balances have been eliminated on consolidation.
|
b)
|
Basis of Presentation
|
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.
|
c)
|
Use of Estimates
|
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets, convertible debentures, stock-based compensation and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
|
d)
|
Cash and Cash Equivalents
|
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of December 31, 2013 and 2012, the Company had no cash equivalents.
|
e)
|
Intangible Assets
|
Intangible assets are carried at the purchased cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.
F-6
- 23 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
|
f)
|
Impairment of Long-Lived Assets
|
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
|
g)
|
Beneficial Conversion Features
|
From time to time, the Company may issue convertible notes that may contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
|
h)
|
Derivative Liability
|
From time to time, the Company may issue equity instruments that may contain an embedded derivative instrument which may result in a derivative liability. A derivative liability exists on the date the equity instrument is issued when there is a contingent exercise provision. The derivative liability is records at is fair value calculated by using an option pricing model such as a multi-nominal lattice model. The fair value of the derivative liability is then calculated on each balance sheet date with the corresponding gains and losses recorded in the consolidated statement of operations. As at December 31, 2013, the Company had 51,166,667 (2012 – nil) potentially dilutive shares from outstanding convertible debentures.
|
i)
|
Development Stage Company
|
The Company is currently considered a development stage company as defined by ASC 915-10-05. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date. An entity remains in the development stage until such time as, among other factors, revenues have been realized. To date, the development stage of the Company’s operations consists of developing the business model and marketing concepts.
|
j)
|
Basic and Diluted Net Loss Per Share
|
The Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
|
k)
|
Income Taxes
|
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes, as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
|
l)
|
Comprehensive Loss
|
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2013 and 2012, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
F-7
- 24 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
|
2.
|
Summary of Significant Accounting Policies (continued)
|
|
m)
|
Financial Instruments
|
ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at December 31, 2013 and 2012 as follows:
|
Balance,
December 31, 2012
$
|
New Issuances
$
|
Changes in Fair Values
$
|
Balance,
December 31, 2013
$
|
||||||||||||
|
Convertible debenture
|
– | 92,500 | (83,987 | ) | 8,513 | ||||||||||
|
Derivative Liability
|
– | 46,532 | (1,011 | ) | 45,521 | ||||||||||
|
Loss on change in fair value of derivative liability
|
– | – | 45,521 | 45,521 | |||||||||||
| – | 139,032 | (39,477 | ) | 17,555 | |||||||||||
The carrying values of all of our other financial instruments, which include accounts payable and accrued liabilities, and amounts due to related parties approximate their current fair values because of their nature and respective maturity dates or durations.
|
n)
|
Recent Accounting Pronouncements
|
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income This ASU requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and to present either on the face of the statement where net income is presented, or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. The amendments are effective for annual and interim reporting periods beginning on or after December 15, 2012. The disclosures required from adoption of this ASU have been included in these financial statements.
In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013 11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.
F-8
- 25 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
|
o)
|
Recent Accounting Pronouncements (continued)
|
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Convertible Debentures
|
a)
|
In August 2011, the Company issued a convertible debenture to a non-related party for $500,000, comprised of payments of $100,000 on August 19, 2011, $150,000 on August 26, 2011, and $250,000 on September 6, 2011. Under the terms of the note, the amount owing is unsecured, due interest of 3% per annum, and due on or before February 19, 2013.
|
|
b)
|
The convertible debenture also grants the right of the Company to convert its debt into common shares of the Company at any time at a conversion price of $0.25 per share. For the first payment of $100,000 on August 19, 2011, the Company recorded beneficial conversion of $16,800 relating to the number of convertible shares (400,000 shares) and the excess of the fair value of the share price and the conversion price. No beneficial conversion was recorded for the $150,000 and $250,000 payments, as the fair value of the Company’s share prices was less than the conversion price on the date of issuance.
|
| On December 19, 2012, the Company exercised its right to convert the outstanding balance of the convertible debenture of $500,000 and accrued interest of $20,055 at an exercise price of $0.25 per share resulting in the Company issuing 2,080,220 common shares. For the year ended December 31, 2012, the Company recorded accretion expense of $12,669. As the loan was converted within the terms of the agreement no gain or loss on conversion was recorded. |
|
c)
|
On June 29, 2012, the Company issued three separate convertible drawdown note payables of $50,000 each, with $20,000 of each note being received on June 29, 2012 and the remaining $30,000 for each note to be received on or before August 3, 2012. Under the terms of the note, the amount owing is unsecured, due interest of 6% per annum, and due on or before December 31, 2013.
|
|
d)
|
The convertible debentures also grant the right of the Holder and the Company to convert its debt into common shares of the Company at any time at a conversion price of $0.01 per share. No beneficial conversion feature was recorded for the, as the fair value of the Company’s share prices was less than the conversion price on the date of issuance. As of August 3, 2012, the second instalments for each of the notes had not been received and were in default in accordance with the agreements.
|
| On November 26, 2012, the Company and each of the holders (non-related parties) of the convertible debentures entered into settlement and general release agreements releasing the holders of their requirement to provide the additional $30,000 each of proceeds pursuant to the June 29, 2012 convertible drawdown notes. Per the terms of the settlement and general release agreements, all three of these convertible debentures were converted into common shares of the Company at an exercise price of $0.0035 per share resulting in the Company issuing 5,714,286 shares for each $20,000 debenture converted. As at December 31, 2012, the Company recorded a loss on conversion of debt of $43,470 for the loan principal of $60,000 and accrued interest of $1,473 recorded based on the original terms of the agreements was forgiven at the time of settlement. |
F-9
- 26 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
3. Convertible Debentures (continued)
|
e)
|
On June 7, 2013, the Company entered into a $32,500 convertible debenture with a non-related party. Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and matures on December 7, 2014. The note is convertible into shares of common stock 180 days after the date of issuance (December 4, 2013) at a conversion rate of 50% of the average of the five lowest closing bid prices of the Company’s common stock for the thirty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2013, the Company recorded accrued interest of $1,475 (2012 - $nil), which has been included in accounts payable and accrued liabilities.
|
|
f)
|
In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $32,500 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. During the year ended December 31, 2013, the Company had amortized $4,116 (2012 - $nil) of the debt discount to interest expense. As at December 31, 2013, the carrying value of the debenture was $4,116 (2012 - $nil).
|
| On December 4, 2013, the note became convertible resulting in the Company recording a derivative liability of $46,532 with a corresponding adjustment to loss on change in fair value of derivative liabilities. As at December 31, 2013, the Company revalued the derivative liability to its fair value resulting in the Company recording $1,011 as gain on change in fair value of derivative liabilities. As at December 31, 2013, the fair value of the derivative liability was $45,521 (2012 - $nil). Refer to Note 4. |
|
g)
|
On July 15, 2013, the Company entered into a $27,500 convertible debenture with a non-related party. Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and matures on January 11, 2015. The note is convertible into shares of common stock 180 days after the date of issuance (January 11, 2014) at a conversion rate of 50% of the average of the five lowest closing bid prices of the Company’s common stock for the thirty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2013, the Company recorded accrued interest of $1,019 (2012 - $nil), which has been included in accounts payable and accrued liabilities.
|
|
h)
|
In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $27,500 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. During the year ended December 31, 2013, the Company had amortized $2,779 (2012 - $nil) of the debt discount to interest expense. As at December 31, 2013, the carrying value of the debenture was $2,779 (2012 - $nil).
|
| As the note does not become convertible until January 11, 2014, the Company has not yet recognized any derivative liability associated with this note. |
|
i)
|
On October 4, 2013, the Company entered into a $32,500 convertible debenture with a non-related party. Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and matures on July 8, 2015. The note is convertible into shares of common stock 180 days after the date of issuance (April 2, 2014) at a conversion rate of 50% of the average of the five lowest closing bid prices of the Company’s common stock for the thirty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at December 31, 2013, the Company recorded accrued interest of $627 (2012 - $nil), which has been included in accounts payable and accrued liabilities.
|
|
j)
|
In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $32,500 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. During the year ended December 31, 2013, the Company had amortized $1,618 (2012 - $nil) of the debt discount to interest expense. As at December 31, 2013, the carrying value of the debenture was $1,618 (2012 - $nil).
|
| As the note does not become convertible until April 2, 2014, the Company has not yet recognized any derivative liability associated with this note. |
4. Derivative Liability
The Company records the fair value of the of the conversion price of the convertible debentures disclosed in Note 3(a) in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative was calculated using a multi-nominal lattice model performed by an independent qualified business valuator. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the year ended December 31, 2013, the Company recorded a loss on the change in fair value of derivative liability of $45,521 (2012 - $nil). As at December 31, 2013, the Company recorded a derivative liability of $45,521 (2012 - $nil).
F-10
- 27 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
4. Derivative Liability (continued)
The following inputs and assumptions were used to value the convertible debenture outstanding during the year ended December 31, 2013:
|
●
|
The underlying stock price of $0.0014 was used as the fair value of the common stock
|
|
●
|
The principal of the debenture on the June 7, 2013 date of issuance was $32,500
|
|
●
|
The balance of the principal and interest of the debenture on December 4, 2013, the date the debenture became convertible, was $33,775
|
|
●
|
The balance of the principal and interest of the debenture on December 31, 2013 was $33,975
|
|
●
|
Capital raising events are not a factor for the debenture
|
|
●
|
The Holder would redeem based on availability of alternative financing,0% of the time increasing 1.0% monthly to a maximum of 10%
|
|
●
|
The Holder would automatically convert the note at maturity if the registration (after 120 days) was effective and the Company is not in default
|
|
●
|
The projected annual volatility for each valuation period was based on the historic volatility of the Company of 178% as at December 4, 2013 and 176% as at December 31, 2013
|
|
●
|
An event of default would occur 0% of the time, increasing to 1.0% per month to a maximum of 5%. To date, the debenture is not in default nor converted by the Holder.
|
A summary of the activity of the derivative liability is shown below:
| $ | ||||
|
Balance, December 31, 2012
|
– | |||
|
Derivative loss due to new issuances
|
46,532 | |||
|
Mark to market adjustment at December 31, 2013
|
(1,011 | ) | ||
|
Balance, December 31, 2013
|
45,521 |
5. Related Party Transactions
|
a)
|
As at December 31, 2013, the Company owes $300,000 (2012 - $300,000) to a company controlled by officers and directors of the Company. The amount owing is unsecured, bears interest at 10% per annum, and is due on demand. As at December 31, 2013, the Company has recorded accrued interest of $72,219 (2012 - $42,219) which has been included in accounts payable and accrued liabilities – related party.
|
|
b)
|
As at December 31, 2013, the Company owes $10,225 (2012 - $nil) to companies under common control by officers and directors of the Company which has been included in accounts payable and accrued liabilities – related parties. The amounts owing are unsecured, non-interest bearing, and due on demand.
|
|
c)
|
During the year ended December 31, 2013, the Company has incurred $45,000 (2012 - $43,500) to the President and CEO of the Company for consulting services. As at December 31, 2013, the Company recorded a related party accounts payable of $60,000 (2012 - $15,000), which has been included in accounts payable and accrued liabilities – related party. The amounts owing are unsecured, non-interest bearing, and due on demand.
|
|
d)
|
During the year ended December 31, 2013, the Company incurred $800 (2012 – $nil) to the President and CEO of the Company for reimbursement of expenses which has been included in accounts payable and accrued liabilities – related parties.
|
6. Common Stock
Share Transactions for the Year Ended December 31, 2013:
|
a)
|
On January 9, 2013, the Company issued 600,000 common shares pursuant to a consulting agreement with a non-related party, as noted in Note 7(d). The shares were recorded at their fair value of $6,000 based on the closing market prices on the date of authorization.
|
Share Transactions for the Year Ended December 31, 2012:
|
a)
|
On December 19, 2012, the Company issued 2,080,220 common shares for the conversion of a convertible debenture with a non-related party, as noted in Note 5(a), with a book value of $520,055.
|
|
b)
|
On November 26, 2012, the Company issued 17,142,855 common shares for convertible debentures entered into settlement and general release agreements with non-related parties, as noted in Note 5(b), with a book value of $60,000. The conversion resulted in a loss on settlement of debt of $43,470.
|
|
c)
|
On November 20, 2012, the Company issued 10,000,000 common shares at $0.0035 per share for total cash proceeds of $35,000.
|
F-11
- 28 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
7. Commitments
|
a)
|
On October 12, 2011, the Company entered into a verbal consulting agreement with a non-related party whereby the Company will pay a monthly consulting fee for services provided in the amounts of $3,000. The agreement is for a one month term automatically renewing in each successive month unless earlier terminated. On July 18, 2012, the Board of Directors reviewed the consulting agreement and authorized an increase to the monthly consulting fee from $3,000 to $3,750 per month beginning July 2012. On October 1, 2012, the Board of Directors reviewed the consulting agreement and adjusted the consulting fee from $3,750 to $3,000 per month beginning October 2012.
|
| During the year ended December 31, 2013, the Company incurred $36,000 (2012 - $38,250) in consulting fees relating to this agreement, of which $42,000 (2012 - $6,000) has been recorded in accounts payable and accrued liabilities as at December 31, 2013. |
|
b)
|
On October 12, 2011, the Company entered into a consulting agreement with a non-related party whereby the Company will pay a monthly consulting fee for services provided in the amounts of $27,500. The agreement is for a one month term automatically renewing in each successive month unless earlier terminated.
|
|
During the year ended December 31, 2013, the Company incurred $330,000 (2012 - $330,000) in consulting fees relating to this agreement, of which $383,500 (2012 - $91,000) has been recorded in accounts payable and accrued liabilities as at December 31, 2013.
|
|
c)
|
On October 12, 2011, the Company entered into a consulting agreement with the President and CEO of the Company whereby the Company will pay a monthly consulting fee for services provided in the amounts of $3,000. The agreement is for a one month term automatically renewing in each successive month unless earlier terminated. On June 10, 2012, the Board of Directors authorized an increase to the monthly consulting fee from $3,000 to $6,000 per month beginning June 2012. On July 18, 2012, the Board of Directors reviewed the consulting agreement and adjusted the monthly consulting fee to $3,750 beginning July 2012.
|
| During the year ended December 31, 2013, the Company incurred $45,000 (2012 - $43,500) in consulting fees relating to this agreement, of which $60,000 (2012 - $15,000) has been recorded in accounts payable and accrued liabilities – related parties as at December 31, 2013. |
|
d)
|
On January 2, 2013, the Company entered into a consulting agreement with The Holden Group, LLC (“Holden”) whereby the Company paid Holden $2,000 and issued 600,000 restricted common shares of the Company upon the execution of the agreement as well as pay $500 on each of the first, second and third month anniversaries of the agreement. These final three payments have been accrued and recorded in accounts payable and accrued liabilities.
|
8. Income Taxes
The Company has a net operating loss carried forward of $1,385,519 available to offset taxable income in future years which commence expiring in fiscal 2028.
The income tax benefit has been computed by applying the weighted average income tax rates of Canada (federal and provincial statutory rates) and of the United States (federal and state rates) of 27% and 34%, respectively, to the net loss before income taxes calculated for each jurisdiction. The tax effect of the significant temporary differences, which comprise future tax assets and liabilities, are as follows:
| $ | 2013 | $ | 2012 | |||||
|
Income tax recovery at statutory rate
|
175,604 | 199,965 | ||||||
|
Valuation allowance change
|
(175,604 | ) | (199,965 | ) | ||||
|
Provision for income taxes
|
– | – |
The significant components of deferred income tax assets and liabilities at December 31, 2013 and 2012 are as follows:
| $ | 2013 | $ | 2012 | |||||
|
Net operating loss carried forward
|
470,989 | 295,385 | ||||||
|
Valuation allowance
|
(470,989 | ) | (295,385 | ) | ||||
|
Net deferred income tax asset
|
– | – |
F-12
- 29 -
HDS International Corp.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
8. Income Taxes (continued)
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.
9. Subsequent Event
We have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events after December 31, 2013.
F-13
- 30 -
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES. |
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2013. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 using the criteria established in “ Internal Control - Integrated Framework “ issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2013, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
|
1.
|
We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
|
|
2.
|
We did not maintain appropriate cash controls – As of December 31, 2013, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts.
|
|
3.
|
We did not implement appropriate information technology controls – As at December 31, 2013, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors.
|
- 31 -
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2013 based on criteria established in Internal Control—Integrated Framework issued by COSO.
Continuing Remediation Efforts to address deficiencies in Company’s Internal Control over Financial Reporting
Once the Company is engaged in a business of merit and has sufficient personnel available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:
1. Our Board of Directors will nominate an audit committee or a financial expert on our Board of Directors.
2. We will appoint additional personnel to assist with the preparation of the Company’s monthly financial reporting, including preparation of the monthly bank reconciliations.
Changes in Internal Control over Financial Reporting
During the year ended December 31, 2013, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the our internal control over financial reporting.
| ITEM 9B. | OTHER INFORMATION. |
None.
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS ANDN CORPORATE GOVERNANCE. |
Our directors will serve until their successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serves until his or his successor is duly elected and qualified, or until he or she is removed from office. The board of directors has no nominating, auditing or compensation committees.
The following table provides the names, positions and ages of our directors and officers:
|
Name
|
Age
|
Position
|
|
Tassos Recachinas
|
31
|
President, Principal Executive Officer, Secretary, Treasurer, Principal Financial Officer, Principal Accounting Officer and sole Member of our Board of Directors
|
We have no knowledge of any arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in our control. We are not, to the best of our knowledge, directly or indirectly owned or controlled by another corporation or foreign government.
Set forth below is a brief description of the background and business experience of each of Tassos Recachinas, our sole officer and director. He is expected to hold their offices/positions until the next annual meeting of our stockholders.
- 32 -
Tassos Recachinas
Mr. Tassos D. Recachinas became our sole officer, director and controlling shareholder on August 16, 2011, in connection with the purchase Agreement with HOEL, pursuant to which we acquired a certain technology license from HOEL. Mr. Recachinas, directly and through his affiliates, is the beneficial owner of the majority of the issued and outstanding common stock of the Company, and beneficial owner of all of the issued preferred stock of the Company, making Mr. Recachinas our controlling shareholder. Mr. Recachinas is Managing Member of Sophis Investments LLC (“Sophis”) since June 2008. Sophis is an investment advisor that manages funds investing in special situations and value-oriented opportunities across asset classes. From January 2007 to March 2008, Mr. Recachinas served as an Investment Analyst at Pirate Capital LLC, an activist and event-driven hedge fund manager. From 2005 to 2006, Mr. Recachinas served as Equity Research Associate at Raymond James & Associates, where he provided institutional equity research coverage on technology and defense companies. Mr. Recachinas received a Bachelor of Science summa cum laude Mechanical Engineering from The George Washington University, including one year of engineering and economics studies at Oxford University. Mr. Recachinas previously served as a member of the Board of Directors and member of the Compensation and Strategic Review Committees of The Allied Defense Group, a multinational defense and security company. Based on the foregoing, the Company determined that Mr. Recachinas was duly qualified to serve as the sole member of the Company’s board of directors.
Involvement in Certain Legal Proceedings
During the past ten years, Mr. Recachinas has not been the subjects of the following events:
|
1.
|
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
|
|
|
2.
|
Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
|
3.
|
The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;
|
|
|
|
||
|
i)
|
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
|
|
|
ii)
|
Engaging in any type of business practice; or
|
|
|
iii)
|
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
|
|
|
4.
|
The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
|
|
|
5.
|
Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
|
|
|
6.
|
Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
|
|
|
7.
|
Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
|
|
|
i)
|
Any Federal or State securities or commodities law or regulation; or
|
|
|
ii)
|
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
|
|
|
iii)
|
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
- 33 -
|
8.
|
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
|
Audit Committee Financial Expert
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.
Audit Committee
We do not have a separately designated audit committee. Accordingly, our board of directors is deemed our audit committee as provided for under the Sarbanes-Oxley Act of 2002.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as Exhibit 14.1 to our Form 10-K for the period ended December 31, 2009.
Disclosure Committee
We do not have a disclosure committee or disclosure committee charter. Our disclosure committee is effectively comprised of our sole director, Mr. Tassos Recachinas.
Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended December 31, 2013, all such filing requirements applicable to our officers and directors were complied with.
Director Independence
We have no independent directors.
Family Relationships
There are no family relationships between any of the officers, directors, or consultants.
Conflicts of Interest
Our officers and directors will devote time to projects that do not involve us.
Tassos Recachinas, our sole officer and director controls Hillwinds Ocean Energy, LLC and certain of its affiliates, which may compete with us outside of our licensed territory.
| ITEM 11. | EXECUTIVE COMPENSATION. |
The following table sets forth the compensation paid by us for the last two fiscal years ending December 31, 2013 for each of our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid or named executive officers.
- 34 -
Executive Officer Compensation Table
|
Nonqualified
|
|||||||||
|
Non-Equity
|
Deferred
|
||||||||
|
Stock
|
Option
|
Incentive Plan
|
Compensation
|
All Other
|
|||||
|
Name and
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
|
Principal Position
|
Year
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
|
|||||||||
|
Tassos Recachinas
|
2013
|
45,000
|
0
|
0
|
0
|
0
|
0
|
45,000[1]
|
90,000
|
|
President/CEO/CFO
|
2012
|
43,500
|
0
|
0
|
0
|
0
|
0
|
43,500[1]
|
87,500
|
| [1] | Represents cash consideration in connection with consulting services. |
We have not entered into any written employment agreements with any of our officers. We may enter into employment agreements in the future.
The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officers.
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
Compensation of Directors
The members of our board of directors are not compensated for their services as directors. The board has not implemented a plan to award options to any directors. There are no contractual arrangements with any member of the board of directors. We have no director’s service contracts. The following table sets forth compensation paid to our directors from inception to our year end on December 31, 2013. Since that time, we have not paid any compensation to any director.
Director’s Compensation Table
|
Fees
|
|||||||
|
Earned
|
Nonqualified
|
||||||
|
or
|
Non-Equity
|
Deferred
|
|||||
|
Paid in
|
Stock
|
Option
|
Incentive Plan
|
Compensation
|
All Other
|
||
|
Cash
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
|
Name
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Tassos Recachinas
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
Indemnification
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
- 35 -
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The following table sets forth, as of the date of this report, the total number of shares owned beneficially by our officers, directors, both individually and as a group, and the beneficial owners of 5% or more of our total outstanding shares. The stockholder listed below has direct ownership of his/her shares and possess voting and dispositive power with respect to the shares, unless otherwise noted.
|
Name and Address
|
Number of
|
Percentage of
|
Number of
|
Percentage of
|
||||||||||||
|
Beneficial Owner
|
Common Shares
|
Ownership
|
Preferred Shares
|
Ownership
|
||||||||||||
|
Tassos Recachinas
|
179,450,000[1 | ] | 47.57 | %[3] | 7,500,000[2 | ] | 100.00 | % | ||||||||
|
10 Dorrance Street, Suite 700
|
||||||||||||||||
|
Providence, RI 02093
|
||||||||||||||||
|
All officers and directors as a group
(1 individual)
|
179,450,000 | 47.57 | % | 7,500,000 | 100.00 | % | ||||||||||
| [1] | Of the 179,450,000 shares of common stock for which Mr. Recachinas is listed as beneficial owner, all are registered in the name of Hillwinds Ocean Energy, LLC, which is controlled by Mr. Recachinas. |
| [2] | Of the 7,500,000 preferred shares, all 7,500,000 shares are Class A Preferred Stock, and all are registered in the name of Hillwinds Ocean Energy, LLC, which is controlled by Mr. Recachinas. |
| [3] | Each share of Class A preferred stock is convertible into shares of common stock at a rate of 20 shares of common stock for each share of Class A Preferred Stock. Assuming the conversion of all shares of Class A Preferred Stock into shares of common stock, Mr. Recachinas’ beneficial ownership of our fully diluted common stock would be 62.49%. |
Mr. Recachinas is our only organizer.
Future sales by existing stockholders
We are no longer categorized as a “shell company” as that term is defined in Reg. 405 of the Act. A “shell company” is a corporation with no or nominal assets or its assets consist solely of cash, and no or nominal operations
| ITEM 13. | CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
On December 10, 2012, through our wholly-owned Canadian subsidiary, HDS Energy and Ecosystems NB, Ltd., we entered into a new technology license agreement with HEDC, which expands the geographic territory under our previous technology licenses. All previous license agreements between HDS and HEDC, including the license under asset acquisition agreement dated August 15, 2011, and the intellectual property agreement consummated October 7, 2011 (dated September 2, 2012) have been terminated and superseded in their entirety by the new license agreement (the “NB Provincial License”).
The NB Provincial License expands our exclusive geographic territory to cover the entire Province of New Brunswick, Canada, as compared to the previous exclusive geographic territory under our other licenses, which was defined as Back Bay, New Brunswick, Canada, and any geography within 50 miles from the center of Back Bay, with the boundary on the west being the border with the State of Maine in the United States.
The financial terms of the NB Provincial License transaction to expand our geographic territory were deemed immaterial, with no cash or securities paid or owed by the Company to HEDC. HEDC is controlled by the Company’s officers and directors, who also control the majority of the Company’s basic and fully diluted shares of common stock, and accordingly this transaction was classified as a related-party transaction and was not conducted at arm’s-length.
- 36 -
In determining the consideration for the NB Provincial License, we considered the expanded geographic coverage of the license and new license term. Based upon those factors, we determined that the consideration for the NB Provincial License was more favorable to us than could be obtained from and independent third party, however, we did not obtain any independent opinion as to the appropriateness of the consideration paid to HEDC.
at December 31, 2013, the Company owed $370.967 to Hillwinds Ocean Energy, LLC (“HOEL”), a company controlled by our President, the amounts owing unsecured, bearing interest at 10% per annum, and due August 16, 2012. During 2013, the Company repaid $0 of accrued interest and $0 of principal under the obligation. As at December 31, 2013, the Company has recorded accrued interest of $72.219.
Tassos Recachinas is our only promoter. In addition to the transactions described herein this Item 3, Mr. Recachinas received $45,000 from us during 2013 (43,500, 2012) for management consulting services. Mr. Recachinas has not received anything else of value (including money, property, contracts, options or rights of any kind) from us other than we paid HOEL, a corporation owned and controlled by Mr. Recachinas (a) 7,500,000 shares of our Class A Preferred Stock, $0.001 par value per share; (b) 250,000,000 shares of our common stock, $0.001 par value per share, and (c) a twelve month, 10% promissory note in the sum of $325,000, in connection with the purchase of certain assets from HOEL, including a certain license relating to technologies for gas exchange, carbon dioxide capture and sequestration, algae biomass production and other renewable energy and eco-sustainability applications, as described in the Asset Acquisition Agreement dated August 16, 2011. HOEL is the majority owner of our issued and outstanding common stock and sole owner of all our issued and outstanding preferred stock. The foregoing was an arm’s length transaction negotiated between our former management and Tassos Recachinas on behalf of himself and HOEL. Mr. Recachinas believed we had no appreciative value as a “shell company” and accordingly was only willing to transfer the assets to us in consideration of absolute control of us. The precise amount of securities transferred to Mr. Recachinas was acceptable to him and us.
Other than the foregoing transaction, none of our directors or executive officers, nor any person who owned of record or was known to own beneficially more than 5% of our outstanding shares of common stock, nor any associate or affiliate of such persons or companies, have any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect us.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:
- Disclosing such transactions in reports where required;
- Disclosing in any and all filings with the SEC, where required;
- Obtaining disinterested directors consent; and
- Obtaining shareholder consent where required.
| ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(1) Audit and Audit Related Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
|
2013
|
$ | 14,000 |
M&K CPAS, PLLC
|
|
|
2012
|
$ | 14,000 |
M&K CPAS, PLLC
|
(2) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
|
2013
|
$ | 0 |
M&K CPAS, PLLC
|
|
|
2012
|
$ | 0 |
M&K CPAS, PLLC
|
- 37 -
(3) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
|
2013
|
$ | 0 |
M&K CPAS, PLLC
|
||
|
2012
|
$ | 0 |
M&K CPAS, PLLC
|
(4) Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approved all accounting related activities prior to the performance of any services by any accountant or auditor.
(5) The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was 0%.
| ITEM 15. | EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENTS SCHEDULES. |
|
Exhibit
|
Incorporated by reference
|
Filed
|
|||
|
Number
|
Description of Exhibit
|
Form
|
Date
|
Number
|
herewith
|
|
3.1
|
Articles of Incorporation.
|
S-1
|
3/24/09
|
3.1
|
|
|
3.2
|
Bylaws.
|
S-1
|
3/24/09
|
3.2
|
|
|
3.3
|
Amended and Restated Articles of Incorporation.
|
8-K
|
6/14/11
|
3.1a
|
|
|
3.4
|
Amended and Restated Articles of Incorporation.
|
8-K
|
8/17/11
|
3.1
|
|
|
10.13
|
Promissory Note with Hillwinds Ocean Energy, LLC.
|
8-K
|
8/17/11
|
10.2
|
|
|
10.14
|
Settlement Agreement and General Mutual Release with Serik Enterprises, Inc.
|
10-Q
|
11/21/11
|
10.14
|
|
|
10.15
|
Draw Down Convertible Promissory Note.
|
10-Q
|
11/21/11
|
10.15
|
|
|
10.16
|
Intellectual Property License Agreement with Hillwinds Energy Development Corporation.
|
10-K
|
4/16/12
|
10.1
|
|
|
10.17
|
Exclusivity and Feasibility Study Agreement with City of Saint John.
|
8-K
|
12/05/12
|
10.1
|
|
|
10.18
|
Intellectual Property License Agreement with Hillwinds Energy Development Corporation dated December 10, 2012.
|
8-K
|
12/12/12
|
10.1
|
|
|
10.19
|
Consulting Agreement with The Holden Group.
|
8-K
|
1/03/13
|
10.1
|
|
|
10.20
|
Restructuring Agreement with Dennis Holden.
|
8-K/A
|
2/14/13
|
10.1
|
|
|
10.21
|
Restructuring Agreement with Stephen Walker.
|
8-K/A
|
2/14/13
|
10.2
|
|
|
10.22
|
Restructuring Agreement with Lance Warren.
|
8-K/A
|
2/14/13
|
10.3
|
|
|
14.1
|
Code of Ethics.
|
10-K
|
3/29/11
|
14.1
|
|
|
21.1
|
List of Subsidiaries.
|
S-1/A-1
|
1/17/13
|
21.1
|
|
| 23.1 | Consent of M&K CPAS, PLLC | X | |||
|
31.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
|
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
|
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
|
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
|
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
|||
|
101.DEF
|
XBRL Taxonomy Extension – Definition.
|
X
|
|||
- 38 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 7th day of April, 2014.
|
HDS INTERNATIONAL CORP.
|
||
|
(the “Registrant”)
|
||
|
BY:
|
TASSOS RECACHINAS | |
|
Tassos Recachinas
|
||
|
President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Secretary/Treasurer and sole member of the Board of Directors
|
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the date indicated.
|
Signature
|
Title
|
Date
|
| TASSOS RECACHINAS |
|
April 7, 2014
|
|
Tassos Recachinas
|
President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer,
|
|
|
Secretary/Treasurer and sole member of the Board of Directors
|
||
|
|
- 39 -
|
Exhibit
|
Incorporated by reference
|
Filed
|
|||
|
Number
|
Description of Exhibit
|
Form
|
Date
|
Number
|
herewith
|
|
3.1
|
Articles of Incorporation.
|
S-1
|
3/24/09
|
3.1
|
|
|
3.2
|
Bylaws.
|
S-1
|
3/24/09
|
3.2
|
|
|
3.3
|
Amended and Restated Articles of Incorporation.
|
8-K
|
6/14/11
|
3.1a
|
|
|
3.4
|
Amended and Restated Articles of Incorporation.
|
8-K
|
8/17/11
|
3.1
|
|
|
10.13
|
Promissory Note with Hillwinds Ocean Energy, LLC.
|
8-K
|
8/17/11
|
10.2
|
|
|
10.14
|
Settlement Agreement and General Mutual Release with Serik Enterprises, Inc.
|
10-Q
|
11/21/11
|
10.14
|
|
|
10.15
|
Draw Down Convertible Promissory Note.
|
10-Q
|
11/21/11
|
10.15
|
|
|
10.16
|
Intellectual Property License Agreement with Hillwinds Energy Development Corporation.
|
10-K
|
4/16/12
|
10.1
|
|
|
10.17
|
Exclusivity and Feasibility Study Agreement with City of Saint John.
|
8-K
|
12/05/12
|
10.1
|
|
|
10.18
|
Intellectual Property License Agreement with Hillwinds Energy Development Corporation dated December 10, 2012.
|
8-K
|
12/12/12
|
10.1
|
|
|
10.19
|
Consulting Agreement with The Holden Group.
|
8-K
|
1/03/13
|
10.1
|
|
|
10.20
|
Restructuring Agreement with Dennis Holden.
|
8-K/A
|
2/14/13
|
10.1
|
|
|
10.21
|
Restructuring Agreement with Stephen Walker.
|
8-K/A
|
2/14/13
|
10.2
|
|
|
10.22
|
Restructuring Agreement with Lance Warren.
|
8-K/A
|
2/14/13
|
10.3
|
|
|
14.1
|
Code of Ethics.
|
10-K
|
3/29/11
|
14.1
|
|
|
21.1
|
List of Subsidiaries.
|
S-1/A-1
|
1/17/13
|
21.1
|
|
| 23.1 | Consent of M&K CPAS, PLLC | X | |||
|
31.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
|
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
|
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
|
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
|
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
|||
|
101.DEF
|
XBRL Taxonomy Extension – Definition.
|
X
|
|||
- 40 -