Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A-1
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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 JUNE 30, 2011
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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)
345 S. End Avenue #7P
New York, NY 10280
(Address of principal executive offices)
(212) 786-1290
(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 [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of August 11, 2011, there were 538,200,000 shares of the registrant’s $0.001 par value common stock issued and outstanding.
REASON FOR AMENDMENT
The sole purpose of this Amendment to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2011 is to furnish the Interactive Data File exhibits pursuant to Rule 405 of Regulation S-T. No other changes have been made to the 10-Q, and this Amendment has not been updated to reflect events occurring subsequent to the filing of this 10-Q.
HDS INTERNATIONAL CORP.*
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
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3
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ITEM 2.
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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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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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14
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ITEM 4.
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CONTROLS AND PROCEDURES
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14
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PART II. OTHER INFORMATION
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ITEM 1.
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LEGAL PROCEEDINGS
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15
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ITEM 1A.
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RISK FACTORS
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15
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ITEM 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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15
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ITEM 3.
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DEFAULTS UPON SENIOR SECURITIES
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15
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ITEM 4.
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[REMOVED AND RESERVED]
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15
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ITEM 5.
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OTHER INFORMATION
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15
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ITEM 6.
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EXHIBITS
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16
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Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of HDS International Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available
or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "HDSI" refers to HDS International Corp.
2
ITEM 1. FINANCIAL STATEMENTS.
HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
June 30, 2011
| Index | |
| Balance Sheets (unaudited) | 4 |
| Statements of Operations (unaudited) | 5 |
| Statements of Cash Flows (unaudited) | 6 |
| Notes to the Financial Statements (unaudited) | 7 |
3
HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Balance Sheets
(expressed in U.S. dollars)
(unaudited)
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June 30,
2011
$
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December 31,
2010
$
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ASSETS
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Current Assets
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Cash
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2,879
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33,034
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Total Assets
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2,879
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33,034
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current Liabilities
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Accounts payable and accrued liabilities
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52,305
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30,567
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Due to related parties
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21,965
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11,965
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Notes payable
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149,600
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139,600
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Total Liabilities
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223,870
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182,132
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Stockholders’ Deficit
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Preferred Stock
Authorized: 50,000,000 preferred shares, with a par value of $0.001 per share
Issued and outstanding: nil preferred shares
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–
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–
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Common Stock
Authorized: 550,000,000 common shares, with a par value of $0.001 per share
Issued and outstanding: 538,200,000 common shares
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538,200
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538,200
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Additional paid-in capital
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(518,801)
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(518,801)
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Deficit accumulated during the development stage
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(240,390)
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(168,497)
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Total Stockholders’ Deficit
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(220,991)
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(149,098)
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Total Liabilities and Stockholders’ Deficit
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2,879
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33,034
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(The accompanying notes are an integral part of these financial statements)
4
HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Statements of Operations
(expressed in U.S. dollars)
(unaudited)
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For the Three Months Ended
June 30,
2011
$
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For the Three Months Ended
June 30,
2010
$
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For the Six Months Ended
June 30,
2011
$
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For the Six Months Ended
June 30,
2010
$
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Accumulated from
November 3, 2008
(date of inception)
to June 30,
2011
$
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Revenue
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–
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–
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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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–
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–
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20,000
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–
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80,000
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General and administrative
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1,632
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206
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2,237
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431
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3,790
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Management fees
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7,500
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7,500
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15,000
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10,000
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38,727
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Professional fees
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11,000
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11,000
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26,000
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31,000
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89,550
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Transfer agent fees
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1,100
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5,549
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1,618
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5,787
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16,087
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Loss Before Other Expense
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(21,232)
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(24,255)
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(64,855)
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(47,218)
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(228,154)
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Other Expense
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Interest Expense
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(3,519)
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(619)
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(7,038)
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(670)
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(12,236)
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Net Loss for the Period
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(24,751)
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(24,874)
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(71,893)
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(47,888)
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(240,390)
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Net Loss Per Share, Basic and Diluted
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–
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–
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–
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–
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Weighted Average Shares Outstanding
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538,200,000
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538,200,000
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538,200,000
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538,200,000
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(The accompanying notes are an integral part of these financial statements)
5
HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
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For the Six Months Ended
June 30,
2011
$
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For the Six Months Ended
June 30,
2010
$
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Accumulated from
November 3, 2008
(date of inception)
to June 30,
2011
$
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Operating Activities
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Net loss for the period
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(71,893)
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(47,888)
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(240,390)
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Adjustment to reconcile net loss to cash used in operating
activities:
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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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–
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4,500
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5,500
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Shares issuable for settlement of services
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–
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1,500
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1,500
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Changes in operating assets and liabilities:
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Accounts payable and accrued liabilities
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21,738
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16,620
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52,305
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Due to related parties
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10,000
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–
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21,965
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Net Cash Used in Operating Activities
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(40,155)
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(25,268)
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(156,893)
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Financing activities
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Proceeds from loan payable
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10,000
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34,600
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149,600
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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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Proceeds from the issuance of common stock
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–
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–
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7,523
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Net Cash Provided by Financing Activities
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10,000
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34,600
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159,772
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Increase (decrease) in Cash
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(30,155)
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9,332
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2,879
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Cash, Beginning of Period
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33,034
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11
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–
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Cash, End of Period
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2,879
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9,343
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2,879
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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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2,649
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2,649
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(The accompanying notes are an integral part of these financial statements)
6
HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
1. Nature of Operations and Continuance of Business
HDSI International, Inc. (formerly 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 wireless Internet services (“Wi-Fi”), primarily to the hospitality industry.
Going Concern
These 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 June 30, 2011, the Company had a working capital deficit of $220,991 and an accumulated deficit of $240,390. 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 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) Basis of Presentation
These 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.
b) Use of Estimates
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.
c) 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 June 30, 2011 and December 31, 2010, the Company had no cash equivalents.
d) 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. As at June 30, 2011 and December 31, 2010, the Company did not have any potential dilutive common shares.
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HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
e) Interim Financial Statements
These interim unaudited financial statements have been prepared on the same basis as the annual 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.
f) 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 June 30, 2011 and December 31, 2010, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
g) Financial Instruments
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.
The Company’s financial instruments consist principally of cash, accounts payable, and amounts due to related parties. The fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
h) Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material effect on the Company’s financial
statements.
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HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
h) Recent Accounting Pronouncements (continued)
In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption
of this standard did not have a material effect on the Company’s financial statements.
In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard did not have a material impact on the Company’s financial statements.
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
a) In March 2010, the former President of the Company forgave $2,649, representing all outstanding amounts owing from the Company. The amount has been recorded against the amounts due to related party with a corresponding credit to additional paid-in capital.
b) As of June 30, 2011, the President of the Company was owed $21,965 (2010 - $11,965) for management fees. The amount owing is unsecured, non-interest bearing and due on demand.
4. Notes Payable
a) As of June 30, 2011, the Company issued various notes payable totalling $34,600 (2010 - $34,600) to non-related parties. These amounts owing are unsecured, due at 10% per annum, and due on demand. As of June 30, 2011, accrued interest of $4,198 has been recorded in accrued liabilities.
b) On September 28, 2010, the Company issued a demand note to a non-related party for $105,000 (2010 - $105,000). Under the terms of the note, the amount owing is unsecured, due interest of 10% per annum, and due on or before September 28, 2011. As of June 30, 2011, accrued interest of $7,998 has been recorded in accrued liabilities.
c) In June 16, 2011, the Company issued a demand note to a non-related party for $10,000 (2010 - $nil). Under the terms of the note, the amount owing is unsecured, due interest at 10% per annum, and due on demand. As of June 30, 2011, accrued interest of $38 has been recorded in accrued liabilities. Refer to Note 7.
5. Common Stock
a) On March 9, 2011, the Company and its Board of Directors approved a thirty-to-one (30:1) forward stock split of all issued and outstanding common shares. The effect of the forward stock split increased the number of issued and outstanding common shares from 1,495,000 shares to 44,850,000 shares, and the forward stock split has been applied on a retroactive basis since the Company’s inception date.
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HDS International Inc.
(formerly GMV Wireless, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
5. Common Stock
b) On June 6, 2011, the Company and its Board of Directors approved the increase of the number of authorized common shares to 550,000,000 common shares and 50,000,000 preferred shares, as well as a twelve-to-one (12:1) forward stock split of all issued and outstanding common shares. The effect of the forward stock split increased the number of issued and outstanding common shares from 44,850,000 shares to 538,200,000 shares, and the forward stock split has been applied on a retroactive basis since the Company’s inception date.
6. Commitment
On February 23, 2010, the Company signed a management agreement with the President and Director of the Company. Under the terms of the management agreement, the Company will remit $2,500 per month comprised of $1,000 cash and $1,500 of common shares of the Company at $0.15 per common share. The agreement was amended on October 1, 2010 to remit $2,500 per month in cash.
7. Subsequent Events
a) On July 24, 2011, the Company issued a note payable for proceeds of $15,000. Under the terms of the note, the amount is unsecured, due interest at 10% per annum, and due on demand.
b) On July 27, 2011, the Company repaid a note payable of $10,000 as noted in Note 4(c). The accrued interest relating to the note payable was forgiven on settlement.
10
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.
RESULTS OF OPERATIONS
Working Capital
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June 30,
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December 31,
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2011
$
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2010
$
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Current Assets
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2,879
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33,034
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Current Liabilities
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223,870
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182,132
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Working Capital (Deficit)
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(220,991)
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(149,098)
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Cash Flows
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June 30,
2011
$
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June 30,
2010
$
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Cash Flows from (used in) Operating Activities
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(71,893)
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(25,268)
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Cash Flows from (used in) Financing Activities
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10,000
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34,600
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Net Increase (decrease) in Cash During Period
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(30,155)
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9,332
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Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
Operating expenses for the three months ended June 30, 2011 were $21,232 compared with $24,255 for the three months ended June 30, 2010. The decrease of $3,023 was attributed to the fact that the Company incurred lower transfer agent fees during the current period compared to the prior period. For the six months ended June 30, 2011, the Company incurred operating expenses of $64,855 compared with $47,218 for the six months ended June 30, 2010. The increase of $17,637 is attributed to $20,000 of consulting fees and an increase in management fees of $5,000 as there was six period of management fees in fiscal 2011 compared with only four period in
fiscal 2010. The increase was offset by a decrease of $5,000 in professional fees and $4,169 in transfer agent fees.
During the six months ended June 30, 2011, the Company recorded a net loss of $71,893 compared with a net loss of $47,888 for the six months ended June 30, 2010. In addition to the above, the Company incurred an increase of $6,368 of interest expense relating to debt balances of $149,600 at 10% per annum in fiscal 2011 whereas the Company did not issue its notes payable until June 2010 ($34,600).
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As at June 30, 2011, the Company’s cash balance and total assets were $2,879 compared to $33,034 as at December 31, 2010. The decrease in total assets is attributed to the fact that the Company incurred operating expenses during the first quarter of fiscal 2011 and did not support costs with new equity or debt financing with the exception of $10,000 from a new note payable issued in June 2011.
As at June 30, 2011, the Company had total liabilities of $223,870 compared with total liabilities of $182,132 as at December 31, 2010. The increase in total liabilities is attributed to increases in accounts payable and accrued liabilities of $21,738 due to timing differences between the payment terms of various operating expenditures, $10,000 in amounts due to related parties for unpaid management fees, and $10,000 increase in note payable regarding the new note payable issued in June 2011.
As at June 30, 2011, the Company has a working capital deficit of $220,991compared with $149,098 at December 31, 2010 and the increase in the working capital deficit is attributed to the use of existing cash to settle obligations.
Cashflow from Operating Activities
During the six months ended June 30, 2011, the Company used $40,155 of cash for operating activities compared to the use of $25,268 of cash for operating activities during the six months ended June 30, 2010. The increase in the use of cash for operating activities was attributed to the fact that the Company paid for outstanding and current obligations with existing cash raised from debt financing.
Cashflow from Financing Activities
During the six months ended June 30, 2011, the Company received $10,000 of proceeds from financing activities compared to $34,600 during the six months ended June 30, 2010. The decrease in proceeds from financing activities was due to the fact that the Company only raised $10,000 from the issuance of a note payable in June 2011, compared with $34,600 of notes payable raised in June 2010.
Quarterly Developments
On May 13, 2011, the Company entered into that certain Share Exchange Agreement (the “Share Exchange Agreement”), by and among the Company, AmeriSure Pharmaceuticals LLC, a Delaware limited liability company, (“AmeriSure”), Mackie Barch, the Managing Member of AmeriSure, who presently owns 100% of the membership interests in AmeriSure (the “Membership Interests”), and the Majority Shareholder of the Company (the “Majority Shareholder”). Pursuant to the terms and conditions of the Share Exchange Agreement, AmeriSure shall exchange 100% of the Membership Interests for eight million five hundred thousand (8,500,000) newly
issued shares of the Company’s common stock par value $0.001 per share, and a one-time transfer of twenty million (20,000,000) shares from the Majority Shareholder, resulting in the acquisition of AmeriSure by the Company. Additionally, pursuant to the Share Exchange Agreement, the Majority Shareholder shall cancel sixteen million (16,000,000) shares of the Company’s common stock that he currently owns.
On June 6, 2011, the Company filed Amended and Restated Articles of Incorporation (the “Amendment”) with the Nevada Secretary of State. As a result of the Amendment, the Company has, among other things: (i) changed its name from “GMV Wireless, Inc.” to “HDS International Corp.”; and (ii) increased the aggregate number of authorized shares to 600,000,000 shares, consisting of 550,000,000 shares of Common Stock, par value $0.001 per share and 50,000,000 shares of preferred stock, par value $0.001 per share, of which 25,000,000 shall be designated as Series A Preferred Stock.
Subsequent Developments
On July 7, 2011, the Company terminated that certain Share Exchange Agreement entered into on May 13, 2011, by and among the Company, AmeriSure and Mackie Barch, the Managing Member of AmeriSure (collectively the “Parties”). The Parties have decided it is in their best interests not to move forward with the Share Exchange Agreement and have thus decided to mutually terminate the Share Exchange Agreement.
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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 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.
Critical Accounting Policies
Our 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 financial statements. A complete summary of these policies is included in the notes to our 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
In March 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-11 (“ASU No. 2010-11”), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update. The Company’s adoption of provisions of ASU No. 2010-11 did not have a material effect on the financial
position, results of operations or cash flows of the Company.
In February 2010, the FASB issued ASU 2010-10 (“ASU No. 2010-10”), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions of ASU No. 2010-10 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In February 2010, the FASB issued ASU 2010-09 (“ASU No. 2010-09”), “Subsequent Events (ASC Topic 855): Amendments to Certain Recognition and Disclosure Requirements.” ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The Company’s adoption of provisions of ASU No. 2010-09 did not have a material effect on the financial position, results of operations or cash flows
of the Company.
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In January 2010, the FASB issued ASU 2010-06 (“ASU No. 2010-06”), “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The Company’s adoption of provisions of ASU No. 2010-06 did not have a material effect
on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued an amendment to ASC Topic 505, “Equity”, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The Company’s adoption of the amendment to ASC Topic 505 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued an amendment to ASC Topic 820, “Fair Value Measurements and Disclosure”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement
of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The Company’s adoption of the amendment to ASC Topic 820 did not have a material effect on the financial position, results of operations or cash flows of the Company.
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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2011, 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 29, 2011, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
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Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS.
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
1. Quarterly Issuances:
During the quarter, we did not issue any unregistered securities other than as previously disclosed.
2. Subsequent Issuances:
Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. [REMOVED AND RESERVED].
ITEM 5. OTHER INFORMATION.
On June 6, 2011, Board of Directors of the Company authorized a forward split (the “Forward Split”) of its issued and outstanding common shares, whereby every one (1) old share of common stock will be exchanged for twelve (12) new shares of the Company's common stock. As a result, once the Forward Split is declared effective by the Financial Industry Regulatory Authority, the issued and outstanding shares of common stock will increase from 44,850,000 prior to the Forward Split to 538,200,000 following the
Forward Split. The Forward Split shares are payable upon surrender of certificates to the Company's transfer agent.
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ITEM 6. EXHIBITS.
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Exhibit
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Number
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Description of Exhibit
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Filing
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3.01
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Articles of Incorporation
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Filed with the SEC on March 24, 2009 as part of our Registration Statement on Form S-1.
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3.1a
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Amended and Restated Articles of Incorporation
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Filed with the SEC on June 14, 2011 as part of our Registration Statement on Form 8-K.
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3.02
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Bylaws
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Filed with the SEC on March 24, 2009 as part of our Registration Statement on Form S-1.
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10.01
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Management Agreement between the Company and Mr. Mark Simon dated March 23, 2010.
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Filed with the SEC on April 7, 2010 as part of our Annual Report on Form 10-K.
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10.02
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Promissory Note issued to Newton Management Ltd. dated September 28, 2010.
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Filed with the SEC on October 8, 2010 as part of our Current Report on Form 8-K.
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10.03
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Investors Relations Services Agreement with Blue Chip IR dated October 1, 2010
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Filed with the SEC on November 15, 2010 as part of our Quarterly Report on Form 10-Q.
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10.04
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Amended Management Agreement between the Company and Mr. Mark Simon dated October 1, 2010
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Filed with the SEC on November 10, 2010 as part of our Current Report on Form 8-K.
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10.05
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Share Exchange Agreement with AmeriSure Pharmaceuticals LLC dated May 13, 2011
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Filed with the SEC on May 16, 2011 as part of our Current Report on Form 8-K.
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10.06
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Promissory Note to Amerisure Pharmaceuticals, LLC dated June 20, 2011
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Filed with the SEC on June 29, 2011 as part of our Current Report on Form 8-K.
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14.01
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Code of Ethics
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Filed with the SEC on March 29, 2011 as part of our Annual Report on Form 10-K.
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16.01
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Letter from Former Accountant Li & Company, PC, dated March 22, 2010
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Filed with the SEC on March 22, 2010 as part of our Current Report on Form 8-K/A.
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31.01
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Certification of Principal Executive Officer Pursuant to Rule 13a-14
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Filed herewith.
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31.02
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Certification of Principal Financial Officer Pursuant to Rule 13a-14
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Filed herewith.
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32.01
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CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
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Filed herewith.
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101.INS*
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XBRL Instance Document
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Filed herewith.
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101.SCH*
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XBRL Taxonomy Extension Schema Document
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Filed herewith.
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101.CAL*
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XBRL Taxonomy Extension Calculation Linkbase
Document
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File herewith.
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101.LAB*
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XBRL Taxonomy Extension Labels Linkbase
Document
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Filed herewith.
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase
Document
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Filed herewith.
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101.DEF*
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XBRL Taxonomy Extension Definition Linkbase
Document
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Filed herewith.
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* Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this amended report has been signed below by the following person on behalf of the Registrant and in the capacities on this 12th day of September, 2011.
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HDS INTERNATIONAL CORP.
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BY:
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TASSOS RECACHINAS
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Tassos Recachinas
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President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary, Treasurer and Director
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