GOOD GAMING, INC. - Quarter Report: 2013 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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[X]
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QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 000-53949
HDS INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
Nevada
(State of incorporation)
26-3988293
(I.R.S. Employer Identification No.)
10 Dorrance Street, Suite 700
Providence, RI 02903
(Address of principal executive offices)
(401) 400-0028
(Registrant’s telephone number)
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 last 90 days. YES [X] NO [ ]
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 (SS 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 [ ]
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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer
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Smaller Reporting Company
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[X]
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(Do not check if 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 Exchange Act). YES [ ] NO [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 7, 2013, there were 377,203,075 shares of the registrant’s $0.001 par value common stock issued and outstanding.
HDS INTERNATIONAL CORP.
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Page
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FINANCIAL STATEMENTS.
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3
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3
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4
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5
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6
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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11
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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13
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CONTROLS AND PROCEDURES.
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13
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RISK FACTORS.
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13
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
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13
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EXHIBITS.
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14
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15
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16
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(A Development Stage Company)
(expressed in U.S. dollars)
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March 31,
2013
$
(unaudited)
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December 31,
2012
$
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ASSETS
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Current Assets
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Cash
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–
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12,650
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Total Assets
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–
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12,650
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
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Current Liabilities
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Bank overdraft
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76
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–
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Accounts payable and accrued liabilities
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200,886
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119,732
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Accounts payable and accrued liabilities – related parties
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88,816
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57,219
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Due to related parties
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300,000
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300,000
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Total Liabilities
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589,778
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476,951
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Stockholders’ Equity (Deficit)
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Preferred Stock
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Authorized: 25,000,000 preferred shares, with a par value of $0.001 per share
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Issued and outstanding: nil preferred shares
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–
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–
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Class A Preferred Stock
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Authorized: 25,000,000 preferred shares, with a par value of $0.001 per share
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Issued and outstanding: 7,500,000 preferred shares
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7,500
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7,500
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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
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377,203
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376,603
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Additional paid-in capital
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289,275
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283,875
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Deficit accumulated during the development stage
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(1,263,756)
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(1,132,279)
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Total Stockholders’ Equity (Deficit)
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(589,778)
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(464,301)
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Total Liabilities and Stockholders’ Equity (Deficit)
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–
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12,650
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(The accompanying notes are an integral part of these consolidated financial statements)
-3-
HDS International Corp.
(A Development Stage Company)
(expressed in U.S. dollars)
(unaudited)
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For the Three
Months Ended
March 31,
2013
$
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For the Three
Months Ended
March 31,
2012
$
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Accumulated from
November 3, 2008
(date of inception)
to March 31,
2013
$
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Revenue
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–
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–
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–
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Operating Expenses
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Consulting fees
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111,750
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100,500
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704,000
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General and administrative
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2,661
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16,967
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100,396
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Management fees
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–
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–
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43,727
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Professional fees
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9,500
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8,500
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184,960
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Transfer agent fees
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169
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–
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18,777
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Total Operating Expenses
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124,080
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125,967
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1,051,860
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Loss Before Other Income Expenses (Income)
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(124,080)
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(125,967)
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(1,051,860)
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Other Expenses (Income)
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Accretion expense
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–
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2,743
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16,800
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Loss (gain) on settlement of debt
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–
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–
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18,918
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Impairment of intangible assets
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–
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–
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92,538
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Interest expense
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7,397
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11,190
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83,640
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Total Other Expenses (Income)
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7,397
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13,933
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211,896
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Net Income (Loss) for the Period
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(131,477)
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(139,900)
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(1,263,756)
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Net Income (Loss) Per Share, Basic and Diluted
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–
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–
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Weighted Average Shares Outstanding
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377,189,745
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347,380,000
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(The accompanying notes are an integral part of these consolidated financial statements)
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HDS International Corp.
(A Development Stage Company)
(expressed in U.S. dollars)
(unaudited)
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For the Three
Months Ended
March 31,
2013
$
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For the Three
Months Ended
March 31,
2012
$
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Accumulated from
November 3, 2008
(date of inception)
to March 31,
2013
$
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Operating Activities
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Net income (loss)
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(131,477)
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(139,900)
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(1,263,756)
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Adjustment to reconcile net income (loss) to cash used in
operating activities:
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Accretion of debt discount
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–
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2,743
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16,800
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Loss (gain) on settlement of debt
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–
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–
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18,918
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Impairment of intangible asset
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–
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–
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92,538
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Stock-based compensation
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–
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–
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2,227
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Shares issued for management fees
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6,000
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–
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13,000
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Changes in operating assets and liabilities:
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–
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Prepaid expense and deposits
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–
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1,823
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–
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Accounts payable and accrued liabilities
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81,154
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12,239
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248,493
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Accounts payable and accrued liabilities – related parties
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31,597
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10,479
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88,816
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Due to related parties
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–
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–
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11,965
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Net Cash Used in Operating Activities
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(12,726)
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(112,616)
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(770,999)
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Investing Activities
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Acquisition of intangible assets
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–
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–
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(10,000)
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Net Cash Used by Investing Activities
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–
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–
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(10,000)
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Financing activities
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Bank overdraft
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76
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–
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76
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Proceeds from loan payable
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–
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–
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709,600
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Repayment of loan payable
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–
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–
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(149,449)
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Proceeds from related parties
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–
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–
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2,649
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Repayment to related parties
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–
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–
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(25,000)
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Capital contribution
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–
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–
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200,600
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Proceeds from the issuance of common stock
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–
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–
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42,523
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Net Cash Provided by Financing Activities
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76
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–
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780,999
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Increase (decrease) in Cash
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(12,650)
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(112,616)
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–
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Cash, Beginning of Period
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12,650
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320,178
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–
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Cash, End of Period
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–
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207,562
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–
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Supplemental Disclosures
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Interest paid
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–
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–
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–
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Income tax paid
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–
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–
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–
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Non-cash investing and financing activities
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Forgiveness of related party debt
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–
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–
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2,649
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Issuance of common shares for settlement of debt
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–
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–
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580,055
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Issuance of common shares for acquisition of assets
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–
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–
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250,000
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Issuance of preferred shares for acquisition of assets
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–
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–
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7,500
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Issuance of note payable for acquisition of assets
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–
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–
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325,000
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(The accompanying notes are an integral part of these consolidated financial statements)
-5-
HDS International Corp.
(A Development Stage Company)
(expressed in U.S. dollars)
1. Nature of Operations and Continuance of Business
HDS International Corp. as GMV Wireless, Inc. (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 in the Province of New Brunswick, Canada.
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 March 31, 2013, the Company had a working capital deficit of $589,778 and an accumulated deficit of $1,263,756. 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
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a)
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Principles of Consolidation
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The consolidated financial statements financial statements for the periods ended March 31, 2013 and December 31, 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 have been eliminated in consolidation.
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b)
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Basis of Presentation
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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.
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c)
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Use of Estimates
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The preparation of financial statements in conformity with generally accepted accounting principles in the United States and 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 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.
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d)
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Cash and Cash Equivalents
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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 March 31, 2013 and December 31, 2012, the Company had no cash equivalents.
HDS International Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
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e)
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Intangible Assets
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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.
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f)
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Impairment of Long-Lived Assets
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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.
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g)
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Beneficial Conversion Features
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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.
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h)
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Development Stage Company
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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.
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i)
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Basic and Diluted Net Loss Per Share
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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.
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j)
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Interim Consolidated Financial Statements
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These interim unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
HDS International Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
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k)
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Income Taxes
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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.
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l)
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Comprehensive Loss
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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, 2012 and 2011, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
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m)
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Financial Instruments
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ASC 820, “Fair Value Measurements”, 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.
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n)
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Recent Accounting Pronouncements
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In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, "Technical Corrections and Improvements" in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, "Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)" in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
HDS International Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
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n)
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Recent Accounting Pronouncements (continued)
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In July 2012, the FASB issued ASU 2012-02, "Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment" in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for non-public entities, have not yet been made available for issuance. The adoption of ASU 2012-02 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. Related Party Transactions
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a)
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As at March 31, 2013, the Company owes $349,616 (December 31, 2012 - $342,219) to a company controlled by officers and directors of the Company. The amount owing is unsecured, bears interest at 10% per annum, and due on demand. As at March 31, 2013, the Company has recorded accrued interest of $49,616 (December 31, 2012 - $42,219) included in accounts payable and accrued liabilities – related parties.
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b)
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As at March 31, 2013, the Company owes $12,950 (December 31, 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.
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c)
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For the period ended March 31, 2013, the Company incurred $11,250 (December 31, 2012 - $43,500) to the President and CEO of the Company for consulting services. As at March 31, 2013, the Company recorded a related party accounts payable of $26,250 (December 31, 2012 - $15,000), which has been included in accounts payable and accrued liabilities – related parties.
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4. Common Stock
On January 2, 2013, the measurement date, the Company issued 600,000 common shares with a fair value of $6,000 for consulting services. The fair value of the common shares was determined by using the closing trading price on the measurement date.
5. Commitments
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a)
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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.
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During the period ended March 31, 2013, the Company incurred $9,000 (December 31, 2012 - $38,250) in consulting fees relating to this agreement, of which $15,000 (December 31, 2012 - $6,000) is recorded in the account payable balance as at March 31, 2013.
HDS International Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
5. Commitments (continued)
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b)
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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.
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During the period ended March 31, 2013, the Company incurred $82,500 (December 31, 2012 - $330,000) in consulting fees relating to this agreement, of which $173,500 (December 31, 2012 - $91,000) is recorded in the account payable balance as at March 31, 2013.
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c)
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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.
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During the year ended March 31, 2013, the Company incurred $11,250 (December 31, 2012 - $43,500) in consulting fees relating to this agreement, of which $26,250 (December 31, 2012 - $15,000) is recorded in the account payable – related parties balance as at March 31, 2013.
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d)
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On January 2, 2013, the Company entered into a consulting agreement with The Holden Group, LLC (the “Consultant”) whereby the Company paid the Consultant $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.
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6. Subsequent Events
We have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events after March 31, 2013.
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 financial statements for the year ended December 31, 2012.
RESULTS OF OPERATIONS
Working Capital
|
|
March 31, 2013
$
|
December 31, 2012
$
|
|
Current Assets
|
–
|
12,650
|
|
Current Liabilities
|
589,778
|
476,951
|
|
Working Capital (Deficit)
|
(589,778)
|
(464,301)
|
Cash Flows
|
|
March 31, 2013
$
|
March 31, 2012
$
|
|
Cash Flows from (used in) Operating Activities
|
(12,726)
|
(112,616)
|
|
Cash Flows from (used in) Financing Activities
|
–
|
–
|
|
Net Increase (decrease) in Cash During Period
|
76
|
–
|
Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
Operating expenses for the three months ended March 31, 2013 were $124,080 compared with $125,967 for the three months ended March 31, 2012. The decrease in operating expenses was attributed to a decrease in general and administrative fees of $14,306 for day-to-day operating costs offset by an increase in consulting fees of $11,250, professional fees of $1,000 and transfer agent fees of $169.
During the three months ended March 31, 2013, the Company recorded a net loss of $131,477 compared with net income of $139,900 for the three months ended March 31, 2012. In addition to the above, the Company incurred a decrease of $3,793 of interest expense relating to debt balances and $2,743 of accretion expense for the fair value of the beneficial conversion feature on the convertible note issued in August 2011 which was fully accreted during fiscal 2012.
Liquidity and Capital Resources
As at March 31, 2013, the Company’s cash balance and total assets were $nil compared to cash balance and total assets of $12,650 as at December 31, 2012. The decrease in the cash balance was attributed to the use of cash during the period for day-to-day activities. The decrease in total assets was attributed to the decrease in cash noted above.
As at March 31, 2013, the Company had total liabilities of $589,778 compared with total liabilities of $476,951 as at December 31, 2012. The increase in total liabilities is attributed to an increase of account payable and accrued liabilities of $112,751, $81,154 of which pertained to trade accounts payable and $31,597 pertained to related party accounts payable and accrued liabilities as well as an increase in the bank overdraft of $76.
As at March 31, 2013, the Company has a working capital deficit of $589,778 compared with working capital deficit of $464,301 at December 31, 2012 with the increase in the working capital deficit attributed to the decrease of $12,650 in cash held to pay for day-to-day activities of the Company and an increase in accounts payable and accrued liabilities during the period and bank overdraft as noted above.
Cashflow from Operating Activities
During the three months ended March 31, 2013, the Company used $12,726 of cash for operating activities compared to the use of $112,616 of cash for operating activities during the three months ended March 31, 2012. The decrease in the use of cash for operating activities was attributed to the fact that the Company incurred less for general and administrative costs for the period for day-to-day activities which was offset by an increase in consulting fees related to the renewable energy and eco-sustainable technologies owned as well as small increases for professional and transfer agent fees.
Cashflow from Financing Activities
During the three months ended March 31, 2013, the Company received $76 of proceeds from financing activities compared to $nil during the three months ended March 31, 2012. The increase in proceeds from financing activities was due to the Company carrying a bank overdraft of $76.
Subsequent Developments
None
Going Concern
We have not attained profitable operations and are dependent upon the continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from our future business. These factors raise substantial doubt regarding our ability to continue as a going concern.
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.
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 consolidated 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.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on March 28, 2013, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
On February 14, 2013, our Form S-1 registration statement (SEC file no. 333-182573) was declared effective by the SEC. Pursuant to the S-1, we are offering no shares of common stock 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 the date of this report, we have not sold any shares of our common stock to anyone.
|
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
|
|
|
10.1
|
Management Agreement between the Company and Mr. Mark Simon dated March 23, 2010.
|
10-K
|
4/07/10
|
10.1
|
|
|
10.2
|
Promissory Note issued to Newton Management Ltd. dated September 28, 2010.
|
8-K
|
10/08/10
|
10.1
|
|
|
10.3
|
Amended Management Agreement between the Company and Mr. Mark Simon dated October 1, 2010.
|
8-K
|
11/10/10
|
10.1
|
|
|
10.4
|
Investors Relations Services Agreement with Blue Chip IR dated October 1, 2010.
|
10-Q
|
11/15/10
|
10.3
|
|
|
10.5
|
Share Exchange Agreement with AmeriSure Pharmaceuticals LLC dated May 13, 2011.
|
8-K
|
5/16/11
|
10.1
|
|
|
10.6
|
Promissory Note to Amerisure Pharmaceuticals, LLC dated June 20, 2011.
|
8-K
|
6/29/11
|
10.1
|
|
|
10.7
|
Promissory Note to Serik Enterprises, Inc.
|
8-K
|
8/12/11
|
10.1
|
|
|
10.8
|
Settlement Agreement with Vail International Ltd.
|
8-K
|
8/12/11
|
10.2
|
|
|
10.9
|
Settlement Agreement with Newton Management Ltd.
|
8-K
|
8/12/11
|
10.3
|
|
|
10.10
|
Settlement Agreement with Mark Simon.
|
8-K
|
8/12/11
|
10.4
|
|
|
10.11
|
Settlement Agreement with Carrillo Huettel, LLC.
|
8-K
|
8/12/11
|
10.5
|
|
|
10.12
|
Asset Acquisition Agreement.
|
8-K
|
8/17/11
|
10.1
|
|
|
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
|
||
|
31.1
|
Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
32.1
|
Certification of Chief Executive 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
|
|||
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 on this 15th day of May, 2013.
|
HDS INTERNATIONAL CORP.
|
||
|
(the “Registrant”)
|
||
|
BY:
|
TASSOS RECACHINAS
|
|
|
Tassos Recachinas
|
||
|
President
|
||
|
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
|
|
|
10.1
|
Management Agreement between the Company and Mr. Mark Simon dated March 23, 2010.
|
10-K
|
4/07/10
|
10.1
|
|
|
10.2
|
Promissory Note issued to Newton Management Ltd. dated September 28, 2010.
|
8-K
|
10/08/10
|
10.1
|
|
|
10.3
|
Amended Management Agreement between the Company and Mr. Mark Simon dated October 1, 2010.
|
8-K
|
11/10/10
|
10.1
|
|
|
10.4
|
Investors Relations Services Agreement with Blue Chip IR dated October 1, 2010.
|
10-Q
|
11/15/10
|
10.3
|
|
|
10.5
|
Share Exchange Agreement with AmeriSure Pharmaceuticals LLC dated May 13, 2011.
|
8-K
|
5/16/11
|
10.1
|
|
|
10.6
|
Promissory Note to Amerisure Pharmaceuticals, LLC dated June 20, 2011.
|
8-K
|
6/29/11
|
10.1
|
|
|
10.7
|
Promissory Note to Serik Enterprises, Inc.
|
8-K
|
8/12/11
|
10.1
|
|
|
10.8
|
Settlement Agreement with Vail International Ltd.
|
8-K
|
8/12/11
|
10.2
|
|
|
10.9
|
Settlement Agreement with Newton Management Ltd.
|
8-K
|
8/12/11
|
10.3
|
|
|
10.10
|
Settlement Agreement with Mark Simon.
|
8-K
|
8/12/11
|
10.4
|
|
|
10.11
|
Settlement Agreement with Carrillo Huettel, LLC.
|
8-K
|
8/12/11
|
10.5
|
|
|
10.12
|
Asset Acquisition Agreement.
|
8-K
|
8/17/11
|
10.1
|
|
|
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
|
||
|
31.1
|
Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
32.1
|
Certification of Chief Executive 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
|
|||
-16-