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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


(Mark One)


  X . QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended: June 30, 2013


or


      . TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from: _________________ to _________________


Commission File Number: 333-140148


ANGSTRON HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)


Nevada

 

20-5308449

(State or other jurisdiction of

 

(IRS Employer Identification No.)

incorporation or organization)

 

 


800 E. Colorado Blvd., Suite 888

 

 

Pasadena, CA

 

91101

(Address of principal executive offices)

 

(Zip Code)


(626) 683-9120

(Registrant’s telephone number, including area code)


Indicate whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X . No      .


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  X . No      .


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      . (Do not check if a smaller reporting company)

Smaller reporting company

  X .


Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  X . No      .


As of August 15, 2013, the registrant had 1,277,039 shares of common stock, $0.001 par value per share, issued and outstanding.






ANGSTRON HOLDINGS CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013


TABLE OF CONTENTS


 

 

PAGE

 

 

 

 

PART I - FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements (Unaudited)

4

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

12

 

 

 

Item 4.

Controls and Procedures

13

 

 

 

 

PART II - OTHER INFORMATION

14

 

 

 

Item 1.

Legal Proceedings

14

 

 

 

Item 1A.

Risk Factors

14

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

14

 

 

 

Item 3.

Defaults Upon Senior Securities

14

 

 

 

Item 4.

Mine Safety Disclosures

14

 

 

 

Item 5.

Other Information

14

 

 

 

Item 6.

Exhibits

15

 

 

 

 

SIGNATURES

16




2




PART I


FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in our Form 10-K for the fiscal year ended December 31, 2012 filed with the SEC on April 8, 2013. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.


TABLE OF CONTENTS


 

PAGE

 

 

Consolidated Balance Sheets as of June 30, 2013 (unaudited) and December 31, 2012

4

 

 

Consolidated Statements of Operations for the three and six month periods ended June 30, 2013 and 2012 (unaudited) and for the period from June 28, 2006 (inception) to June 30, 2013 (unaudited)

5

 

 

Consolidated Statements of Cash Flows for the six month periods ended June 30, 2013 and 2012 (unaudited) and for the period from June 28, 2006 (inception) to June 30, 2013 (unaudited)

9

 

 

Notes to the Consolidated Financial Statements (unaudited)

7




3




Angstron Holdings Corporation

(Formerly HK International Group, Inc.)

(A Development Stage Company)

Balance Sheets

ASSETS

 

June 30, 2013

(unaudited)

 

 

December 31,

2012

 

 


 

 

 

Current Assets

 


 

 

 

Cash

$

 10,184

 

$

 4,965

Due from related party

 

 6,329

 

 

 6,329

 

 

 

 

 

 

Total Current Assets

 

 16,513

 

 

 11,294

 

 

 

 

 

 

Non-Current Assets

 

 

 

 

 

Deposits

 

 3,000

 

 

 3,000

 

 

 

 

 

 

Total Assets

$

 19,513

 

$

 14,294

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

$

 38,630

 

$

 120,791

Convertible notes and interest payable

 

 -

 

 

 423,482

 

 

 

 

 

 

Total Current Liabilities

 

 38,630

 

 

 544,273

 

 

 

 

 

 

Total Liabilities

 

 38,630

 

 

 544,273

 

 

 

 

 

 

Stockholders’ Deficit

 

 

 

 

 

Preferred Stock, $.001 par value 1,000,000,000 shares authorized; 1,300 designated Series A Convertible shares; 1,300 designated Series A Convertible shares issued and outstanding as of  June 30, 2013 and December 31, 2012, respectively

 

 1

 

 

 -

Common Stock, par value $.001; 5,000,000,000 shares authorized, 1,277,039  and 702,983 shares issued and outstanding as of June 30, 2013 and December 31, 2012

 

 1,277

 

 

 70,298

Additional paid-in capital

 

 4,217,400

 

 

 3,587,842

Deficit accumulated during the development stage

 

 (4,237,795)

 

 

 (4,188,119)

 

 

 

 

 

 

Total Stockholders’ Deficit

 

 (19,117)

 

 

 (529,979)

 

 

 

 

 

 

Total Liabilities and Stockholders’ Deficit

$

 19,513

 

$

 14,294

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.




4




Angstron Holdings Corporation

(Formerly HR International Group, Inc.)

(A Development Stage Company)

Statements of Operations

For the Periods Three and Six Months Ended June 30, 2013 and 2013

and for the Period from June 28, 2006 (Inception) to June 30, 2013

 

 

 

 

 

 

 

 

 

Three

 

Three

 

Six

 

Six

 

Period from

 

Months

 

Months

 

Months

 

Months

 

June 28, 2006

 

Ended

 

Ended

 

Ended

 

Ended

 

(inception)

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

Through

 

2013

 

2012

 

2013

 

2012

 

June 30, 2013

 

 

 

 

 

 

 

Operating costs

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

$

22,432

$

53,648

$

42,620

$

106,463

$

4,263,124

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

(22,432)

 

(53,648)

 

(42,620)

 

(106,463)

 

(4,263,124)

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

Interest income

 

-

 

-

 

-

 

-

 

10,058

Interest expense

 

-

 

(7,852)

 

(7,056)

 

(15,343)

 

(70,255)

Gain on forgiveness of debt

 

-

 

-

 

-

 

-

 

85,526

 

 

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

-

 

(7,852)

 

(7,056)

 

(15,343)

 

25,329

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(22,432)

$

(61,500)

$

(49,676)

$

(121,806)

$

(4,237,795)

 

 

 

 

 

 

 

 

 

 

 

Loss per share: basic and diluted

$

(0.02)

$

(0.09)

$

(0.05)

$

(0.17)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding: basic and diluted

 

1,277,039

 

702,983

 

1,067,715

 

702,983

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.




5




Angstron Holdings Corporation

(Formerly HR International Group, Inc.)

(A Development Stage Company)
Statements of Cash Flows

For the Periods Three and Six Months Ended June 30, 2013 and 2013

and for the Period from June 28, 2006 (Inception) to June 30, 2013

 

 

 

Six

Months

Ended

June 30,

2013

 

 

Six

Months

Ended

June 30,

2012

 

 

For the Period

from

June 28, 2006

(Inception) to

June 30, 2013

Cash flows from operating activities:

 

 

 

 

 

 

 


          Net loss for the period

$

 (49,676)

 

$

 (121,806)

 

$

 (4,237,795)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock option expense

 

 -

 

 

 -

 

 

 1,372,158

Common stock issues for services

 

 -

 

 

 -

 

 

 4,500

Gain on forgiveness of debt

 

 -

 

 

 -

 

 

 (85,526)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 -

 

 

 22,346

 

 

 131,617

Accounts payable and accrued liabilities

 

 (82,161)

 

 

 54,699

 

 

 97,792

Accounts payable – related party

 

 -

 

 

 -

 

 

 160,389

Interest accrued on notes payable

 

 7,056

 

 

 14,459

 

 

 65,529

Interest accrued on notes payable – related party

 

 -

 

 

 -

 

 

 268

Due from related party

 

 -

 

 

 -

 

 

 (6,329)

Deposits

 

 -

 

 

 -

 

 

 6,228

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 (124,781)

 

 

 (30,302)

 

 

 (2,491,169)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Loan from stockholder

 

 -

 

 

 -

 

 

 13,200

Issuance of convertible preferred stock, net of offering costs

 

 130,000

 

 

 -

 

 

 130,000

Due to related party

 

 -

 

 

 6,385

 

 

 -

Issuance of common stock, net of offering costs

 

 -

 

 

 -

 

 

 2,058,313

Repayment of insurance financing

 

 -

 

 

 (27,808)

 

 

 (112,630)

Proceeds from convertible notes payable

 

 -

 

 

 50,000

 

 

 395,927

Proceeds from notes payable – related party

 

 -

 

 

 -

 

 

 16,543

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 130,000

 

 

 28,577

 

 

 2,501,353

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 5,219

 

 

 (1,725)

 

 

 10,184

 

 

 

 

 

 

 

 

 

Cash, beginning of the period

 

4,965

 

 

 4,136

 

 

 -

Cash, end of the period

$

 10,184

 

$

 2,411

 

$

 10,184

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid

$

 -

 

$

 543

 

$

 2,605

Income taxes paid

$

 -

 

$

 -

 

$

 -

 

 

 

 

 

 

 

 

 

Non-Cash Financing Activities

 

 

 

 

 

 

 

 

Debt forgiveness

$

 -

 

$

 -

 

$

 173,589

Insurance financing

$

 -

 

$

 -

 

$

 123,467

Stock issued for settlement of accounts payable

$

 -

 

$

 -

 

$

 49,580

 

 The accompanying notes are an integral part of these financial statements.




6



ANGSTRON HOLDINGS CORPORATION

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2013

(Unaudited)



NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS


Angstron Holdings Corporation (the “Company”) was incorporated on June 28, 2006 in the state of Nevada under the name Loreto Corporation. The Company pursued its original business plan to create, market, and sell greeting cards to wholesalers and retail customers in shopping malls in its own planned retail shops. However, in 2008, the Company decided to redirect its business focus and strategy toward identifying and pursuing business opportunities in the mining sector in South America, more specifically, in Peru. The Company later changed its name to Loreto Resources Corporation, subsequently to HK International Group Inc. and then to Angstron Holdings Corporation. The Company is in the development stage in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic No. 915, Accounting and Reporting by Development Stage Enterprises.


Effective April 16, 2013, the Company’s board of directors approved a reverse split of the Company’s common stock on the basis of one share for each 100 shares issued and outstanding (1:100 reverse stock split). The total number of authorized shares was also changed. The Company increased its number of authorized shares from 310,000,000 shares, consisting of 300,000,000 shares of common stock and 10,000,000 shares of preferred stock, 1,300 shares of which have been designated as Series A Preferred Stock, to 3,000,000,000 shares, consisting of 2,000,000,000 shares of common stock and 1,000,000,000 shares of preferred stock, 1,300 shares of which have previously been designated as Series A Preferred Stock.


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The accompanying unaudited interim consolidated financial statements of Angstron Holdings Corporation have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year, 2012, as reported in Form 10-K, have been omitted.


NOTE 3. GOING CONCERN


During the three and six month periods ended June 30, 2013, the Company has not generated any revenue and therefore has been unable to generate cash flows sufficient to support its operations and has been dependent on debt and equity financing. In addition to negative cash flow from operations, the Company has experienced recurring net losses, and has an accumulated deficit of $4,237,795 as of June 30, 3013.


These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Going forward, the Company’s plan is to acquire other assets or business operations that will maximize shareholder value. However, no specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or any transactions will be consummated.




7



NOTE 4. CONVERTIBLE PROMISSORY NOTES


On November 2, 2010 and on November 17, 2010, the Company completed closings of a private placement offering of its convertible notes (the “2010 Notes”), totaling approximately $150,000 in principal, to eight stockholders and one unaffiliated third party. The 2010 Notes bore interest of 10%, and would have matured on December 31, 2011. Both the principal and accrued interest are deemed mandatorily converted (see below) on March 15, 2011 at the price paid by investors in that offering, expressed as a percentage of the face amount of debt securities.


On March 15, 2011, the Company completed closings of a private placement offering of its convertible promissory notes (the “March 2011 Notes”), totaling approximately $90,000 in principal, to eight stockholders and one unaffiliated third party. As of March 1, 2011, the Company deemed the notes from the 2010 offering, along with accrued but unpaid interest, to have been converted, on a mandatory basis, into new notes on the same terms as the subsequent notes. The subsequent notes bear interest of 10%, matured on March 31, 2012, and both the principal and accrued interest will be mandatorily converted at a price equal to either (a) the price per share of stock (or unit of stock and other securities) paid by investors in the next securities offering or other financing by the Company, if the financing is an issuance of stock (or unit of stock and other securities), or (b) the price paid by investors in the next securities offering or other financing by the Company, expressed as a percentage of the face amount of debt securities, if the financing is an issuance of debt securities (or units of debt securities and other securities) (including debt securities convertible into stock), upon the closing of, and into the securities issued in, the next financing in which the Company sells at least $1,000,000 of its securities.

On October 10, 2011, the Company closed a private placement offering (the “October 2011 Offering”) of its 10% convertible promissory notes (the “October 2011 Notes”). In the October 2011 Offering, the Company sold $52,500 in principal amount of the October 2011 Notes to an existing investor.


The October 2011 Notes bear interest of 10%, mature on April 9, 2013, and both the principal and accrued interest will be mandatorily converted at a price equal to either (a) the price per share of stock (or unit of stock and other securities) paid by investors in the next securities offering or other financing, if the financing is an issuance of stock (or unit of stock and other securities), or (b) the price paid by investors in the next securities offering or other financing by the Company, expressed as a percentage of the face amount of debt securities, if the financing is an issuance of debt securities (or units of debt securities and other securities) (including debt securities convertible into stock), upon the closing of, and into the securities issued in, the next financing in which the Company sells at least $1,000,000 of its securities.


On March 31, 2012, the 2010 Notes and the March 2011 Notes were amended, and the maturity dates were extended to September 30, 2013. In addition, the mandatory conversion terms for the aforementioned notes were amended to require conversion only if the minimum $1,000,000 financing closes concurrent with the closing of a related merger or other acquisition transaction.


On February 1, 2012, the Company closed a private placement offering (the “February 2012 Offering”) of its 10% convertible promissory notes (the “February 2012 Notes”). In the February 2012 Offering, the Company sold $50,000 in principal amount of the February 2012 Notes to one existing investor. The February 2012 Notes mature on July 31, 2013 and will be automatically converted at the initial closing of the Company’s next private placement in which it sells at least $1,000,000 of its securities, so long as such offering closes concurrent with the closing of a related merger or other acquisition transaction.


On July 25, 2012, the Company closed a private placement offering (the “July 2012 Offering”) of its 10% convertible promissory notes (the “July 2012 Notes”). In the July 2012 Offering, the Company sold $70,000 in principal amount of the July 2012 Notes to one existing investor. The July 2012 Notes mature on January 24, 2014 and will be automatically converted at the initial closing of the Company’s next private placement in which it sells at least $1,000,000 of its securities, so long as such offering closes concurrent with the closing of a related merger or other acquisition transaction.


On March 8, 2013, the Company entered into Promissory Note Conversion Agreements (the “Conversion Agreements”) with each of the holders (the “Noteholders”) of the Company’s outstanding convertible promissory notes (the “Notes”), to convert an aggregate of $430,538 of principal and accrued but unpaid interest due under the Notes, representing all of the Company’s outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares (pre-reverse stock split) (the “Note Conversion Shares”) of the Corporation’s common stock, $0.001 par value per share (“Common Stock”), at a conversion rate of $0.0075 per share (the “Debt Conversion Transaction”).


The Company evaluated the conversion options under FASB ASC Topic 815 – 40 for derivative treatment and determined that the conversion options are required to be accounted for as a derivative upon the aforementioned closing of the next private placement offering. As the closing had not occurred prior to the aforementioned promissory note conversions on March 8, 2013, and as per FASB ASC Topic 470 – 20, the derivative instrument nor the beneficial conversion feature need not be accounted for through the date of the promissory note conversions.


As of June 30, 2013 and as of December 31, 2012, the Company owed principal and accrued interest of $0 and $423,482, respectively.



8




NOTE 5. STOCK TRANSACTIONS


Debt Conversion Transaction


On March 8, 2013, the Company entered into Promissory Note Conversion Agreements (the “Conversion Agreements”) with each of the holders (the “Noteholders”) of the Company’s outstanding convertible promissory notes (the “Notes”), to convert an aggregate of $430,538 of principal and accrued but unpaid interest due under the Notes, representing all of the Company’s outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares (pre-reverse stock split) (the “Note Conversion Shares”) of the Corporation’s common stock, $0.001 par value per share (“Common Stock”), at a conversion rate of $0.0075 per share (the “Debt Conversion Transaction”). (See Note 4)


Series A Preferred Stock Issuance


On March 8, 2013, the Company entered into a Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”) with a California limited liability company (the “Purchaser”), pursuant to which, among other items, on March 11, 2013 (the “Closing Date”), the Company sold to the Purchaser, and the Purchaser purchased from the Company, 1,300 shares of the Company’s Series A Preferred Stock, at the price of $100 per share, for an aggregate purchase price of $130,000, less offering costs of $37,500, which shares of Series A Preferred Stock are currently convertible into an aggregate of 127,703,396 shares (post-reverse stock split) of the Company’s Common Stock (the “Series A Transaction”).


NOTE 6. RELATED PARTY


As of June 30, 2013, Li3 Energy, Inc. is indebted to the Company in the amount of $3,000 related to a deposit amount associated with a shared office lease arrangement which was terminated in 2011.


NOTE 7. SUBSEQUENT EVENTS


In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to the date these financial statements were issued, and has determined that the following significant event has occurred:


On August 7, 2013, the Company increased its number of authorized shares from 3,000,000,000 shares of capital stock, consisting of (i) 2,000,000,000 shares of common stock and (ii) 1,000,000,000 shares of preferred stock, 1,300 shares of which have been designated as Series A Preferred Stock, to 6,000,000,000 shares of capital stock, consisting of (i) 5,000,000,0000 shares of common stock and (ii) 1,000,000,000 shares of preferred stock, 1,300 shares of which have been previously designated as Series A Preferred Stock.



9



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


This report contains forward-looking statements. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,” “objective,” “should,” or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties including those related to changes in economic conditions, new business opportunities and general financial and business conditions, actual results may differ materially from those expressed or implied by the forward-looking statements.


Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-Q to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of its public disclosure practices.


Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and accompanying notes included our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the SEC.


Unless the context otherwise requires, the terms “the Company,” “we,” “us” and “our” refer to Angstron Holdings Corporation


OVERVIEW AND RECENT DEVELOPMENTS


We are a development stage company, recently focused on the acquisition, development and production of significant base and precious metals deposits.


We intended to pursue the acquisition of one or more mining properties in Peru and other South American countries and, to that end, we had opened an office in Lima, Peru. Because we decided not to pursue any of those opportunities, during the quarter ended September 30, 2010, we closed our office in Peru.


Since that time, we have begun identifying and investigating investment opportunities, but we have not yet finalized decisions to pursue any particular project.


On March 8, 2013, we entered into Promissory Note Conversion Agreements (the “Conversion Agreements”) with the holders of all of our outstanding convertible promissory notes (collectively, the “Notes”), pursuant to which, among other things, an aggregate of $430,538 of principal and accrued and unpaid interest due under the Notes, representing all of our outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares (pre-Reverse Stock Split, as described below) of our common stock, $0.001 par value per share (“Common Stock”), at a conversion rate of $0.0075 per share.


In addition, on March 8, 2013, holders of 72,123,396 shares (pre-Reverse Stock Split, as described below) of our Common Stock, (representing approximately 56.5% of our common equity at that time), consented to a proposed 1:100 reverse split of our Common Stock (the “Reverse Stock Split”), as previously authorized by our board of directors (“Board”). Following FINRA’s approval, the Reverse Stock Split became effective in the marketplace as of April 16, 2013 (the “Effective Date”). As a result, we now have 1,277,039 shares of Common Stock issued and outstanding.


On March 11, 2013, we sold 1,300 shares of our Series A convertible preferred stock, $0.001 par value per share (“Series A Preferred Stock”), to Commonwealth Investments, LLC, a California limited liability company (“Commonwealth”). These shares of Series A Preferred Stock are convertible into an aggregate of 127,703,396 shares (post-Reverse Stock Split) of our Common Stock, representing approximately 99.0% of our common equity on an as-converted basis. Commonwealth has advised us that it plans to appoint new members to our Board in the near future, and to make other changes to our management and operations.



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On March 22, 2013, we changed our name to HK International Group, Inc., and increased our number of authorized shares from 310,000,000 shares consisting of (i) 300,000,000 shares of Common Stock, and (ii) 10,000,000 shares of “blank check” preferred stock, par value $0.001 per share (“Preferred Stock”), 1,300 shares of which have been designated as Series A Preferred Stock, to 3,000,000,000 shares, consisting of (i) 2,000,000,000 shares of Common Stock, and (ii) 1,000,000,000 shares of Preferred Stock, 1,300 shares of which have previously been designated as Series A Preferred Stock. Following FINRA’s approval, the name change became effective in the market on the Effective Date. Our trading symbol changed from “LRTC” to “HKIG” on May 13, 2013, which was twenty (20) business days from the Effective Date.


On June 21, 2013, we changed our name to Hygeialand Biomedical Corporation.  Following FINRA’s approval, on July 11, 2013, the name change, and the change of our trading symbol to “HBMC,” became effective in the market.


In connection with the change of our business focus (described above), we split off (the “Split-Off”) our wholly-owned Peruvian subsidiary, Loreto Resources Peru S.R.L. Compania Minera (the “Subsidiary”), which is in the process of being dissolved, to Luis F. Saenz, our former sole officer and director. We entered into a Spilt-Off Agreement (the “Split-Off Agreement”) with Mr. Saenz (as discussed below) to effect the Split-Off, dated as of July 12, 2013 (the “ Split-Off Closing Date”), and the Split-Off has been completed.


Pursuant to the Split-Off Agreement, as of the Split-Off Closing Date:


·

we contributed, assigned, conveyed and transferred all of our assets and property, and all of our debts, adverse claims, liabilities, judgments and obligations relating to the Subsidiary, whether accrued, contingent or otherwise and whether known or unknown, to Mr. Saenz;


·

we transferred all of the outstanding capital stock of the Subsidiary to Mr. Saenz;


·

Mr. Saenz agreed to indemnify us and our officers and directors against any third party claims relating to the Subsidiary; and


·

the Subsidiary and Mr. Saenz pledged not to sue us and forever release us and our present and former officers, directors, stockholders, employees, agents, attorneys and representatives from any and all claims, actions, obligations, liabilities and the like, incurred or suffered by the Subsidiary or Mr. Saenz arising from, relating to, or in any way connected with, any fact, event, transaction, action or omission that occurred or failed to occur on or prior to the Split-Off Closing Date and related to the Subsidiary.


On July 23, 2013, we changed our name to Angstron Holdings Corporation.  Following FINRA’s approval, on August 19, 2013, the name change, and the change of our trading symbol to “ANGP,” became effective in the market.


On August 7, 2013, we increased our number of authorized shares from 3,000,000,000 shares of capital stock, consisting of (i) 2,000,000,000 shares of Common Stock, and (ii) 1,000,000,000 shares of Preferred Stock, 1,300 shares of which have been designated as Series A Preferred Stock, to 6,000,000,000 shares of capital stock, consisting of (i) 5,000,000,000 shares of Common Stock, and (ii) 1,000,000,000 shares of Preferred Stock, 1,300 shares of which have previously been designated as Series A Preferred Stock


Going forward, our plan is to acquire other assets or business operations that will maximize shareholder value. However, no specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or any transactions will be consummated.


Going Concern


During the three month period ended June 30, 2013, we did not generate any revenue. Because we have been unable to generate cash flows sufficient to support our operations, we have been dependent on debt financing from certain of our existing stockholders. In addition to negative cash flow from operations, we have experienced recurring net losses, and have an accumulated deficit of $4,237,795. These factors raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.



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RESULTS OF OPERATIONS


Three Months Ended June 30, 2013 and Three Months Ended June 30, 2012


We are still in our development stage and have generated no revenues to date.


We incurred general and administrative expenses of $22,432 and $53,648 for the three months ended June 30, 2013 and 2012, respectively. These expenses consisted of legal and other professional fees and operating costs incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports.


Our net loss for the three months ended June 30, 2013 and 2012 was $22,432 and $61,500, respectively. The decrease in net loss from the 2012 to the 2013 three-month periods reflects our efforts to reduce overall costs.


We have generated no revenues and our net operating loss from inception through June 30, 2013 was $4,237,795.


Six Months Ended June 30, 2013 and Six Months Ended June 30, 2012


We incurred general and administrative expenses of $42,620 and $106,463 for the six months ended June 30, 2013 and 2012, respectively. These expenses consisted of legal and other professional fees and operating costs incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports.


Our net loss for the six months ended June 30, 2013 and 2012 was $49,676 and $121,806, respectively.


The decrease in net loss from the 2012 to the 2013 six-month periods reflects our efforts to reduce overall costs.


LIQUIDITY AND CAPITAL RESOURCES


Our cash and cash equivalents balance at June 30, 2013 was $10,184 as compared to $4,965 at December 31, 2012.


On March 8, 2013, an aggregate of $430,538 of principal and accrued and unpaid interest due under our outstanding Notes, representing all of our outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares (pre-Reverse Stock Split) of our Common Stock.


On March 11, 2013, we sold 1,300 shares of our Series A Preferred Stock to Commonwealth for an aggregate purchase price of $130,000. We used the net proceeds from the sale of the Series A Preferred Stock to pay outstanding obligations to advisors, service providers and vendors, and to pay any outstanding tax liabilities. In addition, the purchaser of the Series A Preferred Stock paid $37,500 of our legal fees incurred in connection with the transaction.


During the past several years we have conducted a number of small private offerings of our convertible promissory notes, the proceeds from which we used to fund our operations. We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our brief history and historical operating losses, our operations have not been a source of liquidity. We believe that, at our current level of operation, we do not have sufficient cash to meet our expenses for the next three months. We expect that we will need to obtain additional capital in order to maintain our public company regulatory requirements and execute our business plan, build our operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or debt securities, or borrow funds from private lenders or banking institutions. We have not made any decisions with respect to any such financing. There can be no assurance that we will be successful in obtaining additional funding in amounts or on terms acceptable to us, if at all. If we are unable to raise additional funding as necessary, we may have to suspend our operations temporarily or cease operations entirely.


OFF-BALANCE SHEET ARRANGEMENTS


We have no off-balance sheet arrangements.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable.



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ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.


Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our senior management, consisting of Jianguo Xu, our President, Chief Executive Officer and Treasurer (Principal Executive Officer and Principal Financial Officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were not effective because of the identification of what might be deemed a material weakness in our internal control over financial reporting which is identified below.


Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, during the period covered by this quarterly report, our internal controls over financial reporting were not operating effectively. Management did not identify any material weaknesses in our internal control over financial reporting as of June 30, 2013; however, it has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of that date:


·

We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures.


·

We did not maintain proper segregation of duties for the preparation of our financial statements. We currently have one interim officer overseeing all transactions. This has resulted in several deficiencies including the lack of control over preparation of financial statements, and proper application of accounting policies.


Management believes that the material weaknesses set forth the two items above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our Board results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.


Management's Remediation Initiatives


In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate the following series of measures once we have the financial resources to do so:


We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we also plan to appoint one or more outside directors to our Board who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.


Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, would remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.


Changes in Internal Controls over Financial Reporting


There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.



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PART II

OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


We know of no material, existing or pending legal proceedings against us, 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 Exchange Act and are not required to provide the information under this item.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


We did not sell any unregistered securities during the three month period ended June 30, 2013, or subsequent period through the date hereof.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5. OTHER INFORMATION


Not applicable.




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ITEM 6. EXHIBITS


The following exhibits are included with this quarterly report.


Exhibit

No.

 

SEC Report

Reference Number

 

Description

 

 

 

 

 

3.1

 

3.1

 

Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on June 21, 2013 (1)

3.2

 

3.1

 

Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on July 23, 2013 (2)

3.3

 

3.1

 

Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on August 12, 2013 (3)

10.1

 

10.1

 

Split Off Agreement, dated July 12, 2013, by and between the Company, Loreto Resources Peru S.R.L. Compania Minera, and  Luis F. Saenz

31.1/31.2

 

*

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

32.1/32.2

 

*

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

101.INS

 

*

 

XBRL Instance Document***

101.SCH

 

*

 

XBRL Taxonomy Extension Schema Document***

101.CAL

 

*

 

XBRL Taxonomy Extension Calculation Linkbase Document***

101.DEF

 

*

 

XBRL Taxonomy Extension Definition Linkbase Document***

101.LAB

 

*

 

XBRL Taxonomy Extension Label Linkbase Document***

101.PRE

 

*

 

XBRL Taxonomy Extension Presentation Linkbase Document***


 

(1)

Filed with the SEC on June 27, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

 

 

 

 

(2)

Filed with the SEC on July 29, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

 

 

 

 

(3)

Filed with the SEC on August 13, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.


* Filed herewith.


** This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.


*** Pursuant to Rule 406T of Regulation S-T, this XBRL related information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.




15




SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



 

ANGSTRON HOLDINGS CORPORATION

 

 

 

Date: August 19, 2013

By:

/s/ Jianguo Xu

 

 

Jianguo Xu

 

 

President, Chief Executive Officer and Treasurer

 

 

(principal executive and financial officer)




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