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      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 9pt; FONT-WEIGHT: bold"&gt;1.&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;

      &amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;Nature

      of Operations and Continuance of Business&lt;/font&gt;

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      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 9pt"&gt;HDS

      International Corp. (the &amp;#8220;Company&amp;#8221;) was

      incorporated on November 3, 2008 under the laws of the State

      of Nevada.&amp;#160;&amp;#160;A substantial portion of the

      Company&amp;#8217;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.&amp;#160;&amp;#160;The Company plans to engage in the business

      of providing renewable energy and eco-sustainability

      solutions based on its licensed technologies.&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="LINE-HEIGHT: 10.25pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 44pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 9pt"&gt;On

      June 11, 2012, HDS Energy and Ecosystems NB, Ltd., the

      Company&amp;#8217;s wholly owned subsidiary, was incorporated in

      the Province of New Brunswick, Canada to manage the

      operations and other business development efforts.&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="LINE-HEIGHT: 10.25pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 44pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 9pt"&gt;&lt;font style="DISPLAY: inline; TEXT-DECORATION: underline"&gt;Going

      Concern&lt;/font&gt;&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="LINE-HEIGHT: 10.25pt; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 44pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman, serif; FONT-SIZE: 9pt"&gt;These

      consolidated financial statements have been prepared on a

      going concern basis, which implies that the Company will

      continue to realize its assets and discharge its liabilities

      in the normal course of business. The Company has generated

      no revenues to date and has never paid any dividends and is

      unlikely to pay dividends or generate significant earnings in

      the immediate or foreseeable future.&amp;#160; As of June 30,

      2013, the Company had a working capital deficiency of

      $699,760 and an accumulated deficit of $1,403,300. 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&amp;#8217;s ability to continue as a going concern. These

      consolidated financial statements do not include any

      adjustments to the recoverability and classification of

      recorded asset amounts and classification of liabilities that

      might be necessary should the Company be unable to continue

      as a going concern.&amp;#160;&lt;/font&gt;

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