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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 September 30, 2015
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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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Large Accelerated Filer
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[ ]
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Accelerated Filer
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[ ]
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Non-accelerated Filer
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[ ]
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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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Page | ||
PART I. FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS.
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4
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Balance Sheets
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5
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Statements of Operations
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6
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Statements of Cash Flows
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7
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Notes to the Financial Statements
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8
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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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16
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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18
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ITEM 4.
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CONTROLS AND PROCEDURES.
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18
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PART II. OTHER INFORMATION | ||
ITEM 1A. | RISK FACTORS | 18 |
ITEM 6. | EXHIBITS. | 19 |
Signatures | 20 | |
Exhibit Index | 21 | |
HDS International Corp.
(A Development Stage Company)
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September 30, 2015
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Index
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Balance Sheets (unaudited)
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5
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Statements of Operations (unaudited)
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6
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Statements of Cash Flows (unaudited)
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7
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Notes to the Financial Statements (unaudited)
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8
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HDS International Corp
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||||||||
(A Development Stage Company)
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Balance Sheets
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(Expressed in U. S. Dollars
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||||||||
September 30,
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December 31,
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|||||||
2015
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2014
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(Unaudited)
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||||||||
ASSETS
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Current Assets
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||||||||
Cash
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$ | - | $ | 73 | ||||
Current Portion of deferred financing costs
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- | 1,020 | ||||||
Total Current Assets
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- | 1,093 | ||||||
Total Assetrs
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$ | - | $ | 1,093 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
Current Liabilities
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||||||||
Accountspayable and accrued liabilities
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$ | 94,219 | $ | 728,581 | ||||
Accountspayable and accrued liabilities - related party
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6,670 | 304,962 | ||||||
Due to related parties
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- | 300,000 | ||||||
Convertible debentures, net of unamortized discount of $0 and $36,088. respectively
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115,000 | 31,952 | ||||||
Derivative liability
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56,417 | 70,290 | ||||||
Toital Current Liabilities
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272,306 | 1,435,785 | ||||||
Convertible debentures, long-term
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50,000 | |||||||
Total Liabilities
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322,306 | 1,435,785 | ||||||
Stockholders' Deficit
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||||||||
Class A Preferred Stock
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Authorized: 25,000,000 preferred shares, with a par value of $0.001 per share Issued and outstanding: 7,500,000 shares
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7,500 | 7,500 | ||||||
Class B Preferred Stock
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Authorized: 20,000,000 preferred shares, with a par value of $0.001 per share Issued and outstanding: 15,839,300 and 0 shares, respectively
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15,839 | - | ||||||
Common Stock
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||||||||
Authorized: 2,000,000,000 common shares, with a par value of $0.001 per share Issued and outstanding: 1,995,290,000 and 571,564,504 shares, respectively
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1,995,290 | 571,564 | ||||||
Additional paid-in capital
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309,592 | 296,785 | ||||||
Accumulated deficit
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(2,650,527 | ) | (2,310,541 | ) | ||||
Total Stockholders' deficit
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(322,306 | ) | (1,434,692 | ) | ||||
Total liabilities and stockholders' deficit
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$ | - | $ | 1,093 | ||||
The accompanying notes are an integral part of these consolidated financial statements
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HDS International Corp
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(A Development Stage Company)
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Statements of Operations
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(Expressed in U. S. Dollars
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||||||||||||||||
(Unaudited)
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||||||||||||||||
For the Three
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For the Nine
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|||||||||||||||
Months Ended
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Months Ended
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September 30,
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September 30,
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|||||||||||||||
2015
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2014
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2015
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2014
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Revenues
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$ | - | $ | - | $ | - | $ | - | ||||||||
Operating Expenses
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||||||||||||||||
Consulting fees
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- | 96,000 | 98,694 | 288,000 | ||||||||||||
General and administrative
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- | 170 | 127,925 | 2,856 | ||||||||||||
Profeesionsl fees
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- | 5,060 | 45,500 | 26,540 | ||||||||||||
Transfer agent fees
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- | - | - | 20 | ||||||||||||
Total Operating Expenses
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- | 101,230 | 272,119 | 317,416 | ||||||||||||
Net Loss Before Other Expenses
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- | (101,230 | ) | (272,119 | ) | (317,416 | ) | |||||||||
Other Expenses
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Interest expense
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4,263 | 26,601 | 35,237 | 71,013 | ||||||||||||
Loss on Change in fair value of derivitive liability
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- | (7,580 | ) | 32,630 | 78,863 | |||||||||||
Total Other Expenses
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4,263 | 19,021 | 67,867 | 149,876 | ||||||||||||
Net Loss
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$ | (4,263 | ) | $ | (120,251 | ) | $ | (339,986 | ) | $ | (467,292 | ) | ||||
Net Loss Per Share, Basic and Diluteded
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$ | - | $ | - | $ | - | $ | - | ||||||||
Weigted Average Shares Outstanding
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2,539,655,996 | 385,744,507 | 1,549,334,532 | 377,035,865 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
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HDS International Corp
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(A Development Stage Company)
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Statements of Cash Flows
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(Expressed in U. S. Dollars
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(Unaudited)
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For the nine
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For the nine
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Months
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Months
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Ended
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Ended
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September 30,
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September 30,
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2015
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2014
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Operating Activities
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Net Loss
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$ | (339,986 | ) | $ | (467,292 | ) | ||
Adjustment to reconcile net loss to
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net cash used in operating activities
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Accretion of debt discount
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15,052 | 36,950 | ||||||
Amortixation of deferred financing costs
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1,020 | 4,754 | ||||||
Loss on change in fair value of derivitive liability
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32,630 | 78,863 | ||||||
Changes in operating asstes and liabilities
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Accounts payable and accrued liabilities
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82,254 | 206,110 | ||||||
Accounts payable and accrued liabilities-related parties
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43,957 | 112,439 | ||||||
Net Cash Provided by (Used in) Operating Activities
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(165,073 | ) | (28,176 | ) | ||||
Financing activities
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Proceeds from Convertible debenturee, net of financing costs
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165,000 | 15,000 | ||||||
Proceeds from related parties
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- | 9,968 | ||||||
Net Cash Provided by (Used in) Financing activities
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165,000 | 24,968 | ||||||
Change in Cash
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(73 | ) | (3,208 | ) | ||||
Cash, Beginning of Period
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73 | 3,371 | ||||||
Cash, End of period
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$ | - | $ | 163 | ||||
The accompanying notes are an integral part of these consolidated financial statements
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1.
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Nature of Operations and Continuance of Business
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2.
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Summary of Significant Accounting Policies
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a)
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Basis of Presentation
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b)
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Use of Estimates
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c)
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Cash and Cash Equivalents
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d)
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Intangible Assets
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HDS International Corp.
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e)
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Impairment of Long-Lived Assets
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f)
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Beneficial Conversion Features
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g)
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Derivative Liability
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h)
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Development Stage Company
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i)
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Basic and Diluted Net Loss Per Share
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j)
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Interim Financial Statements
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k)
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Income Taxes
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l)
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Comprehensive Loss
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m)
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Financial Instruments
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Balance, | New | Changes in | Balance, | |||||||||||||||||
December 31, 2014 | Issuances | Conversions | Fair Values | Septemberer 30, 2015 | ||||||||||||||||
Derivative Liability | $ | 70,290 | - | $ | (64,767 | ) | $ | 50,894 | $ | 56,417 |
2.
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Summary of Significant Accounting Policies (continued)
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n)
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Recent Accounting Pronouncements
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3.
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Convertible Debentures
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a)
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On February 18, 2014, the Company entered into a $15,500 convertible debenture with a non-related party. Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and is due on August 20, 2015. The note is convertible into shares of common stock 180 days after the date of issuance (August 17, 2014) at a conversion rate of 50% of the average of the five lowest closing bid prices of the Company's common stock for the thirty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at June 30, 2014, the Company recorded accrued interest of $448 (December, 31, 2013 -
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3.
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Convertible Debentures (continued)
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b)
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On April 15, 2015, the Company entered into a $100,000 convertible debenture with a non-related party. During the quarter ended June 30, 2015 The Company received the first $50,000 payment. The remaining $50,000 payment will be made at the request of the borrower. No additional payments have been made as of June 30, 2015. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on October 16, 2016. The note is convertible into shares of common stock any time after the maturity date at a conversion rate of 50% of the average of the five lowest closing bid prices of the Company's common stock for the thirty trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2015, the Company recorded accrued interest of $1,041 (December, 31, 2014 $0), which has been included in accounts payable and accrued liabilities.
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c)
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On April 1, 2015, we entered into a transaction with Iconic Holdings, LLC (the "Purchaser"), whereby Iconic Holdings agreed to provide up to $600,000 through a structured convertible promissory note (the "Note"), with funds to be received in tranches. The note bears interest of 10% and is due April 1, 2016. The initial proceeds of $40,000 was received on April 9, 2015, with $30,000 remitted and delivered to us, $4,000 retained by the Purchaser as an original issue discount, and $6,000 retained by the Purchaser for legal expenses.
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d)
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On April 1, 2015, we consented to the further assignment of the February 18, 2014 and the October 4, 2013 Asher Notes, which were initially assigned to JABRO. The April 8, 2015 assignment assigned the notes to the Purchaser. According to the terms of the April 8, 2015 assignment agreement, the February 18, 2014 note was sold to the Purchaser and simultaneously exchanged for a new note (the "New February Note"). In accordance with the exchange, The New February Note was deemed to have been issued February 18, 2014, and carried substantially the same terms as the original note, with the following exceptions: the New February Note bears 0% interest, and the overall ownership of the Purchaser at any one moment shall be limited to 9.99% of the issued and outstanding shares of our common stock.
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4.
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Derivative Liabilities
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a)
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The underlying stock price of $0.0014 was used as the fair value of the common stock as at December 31, 2014.
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b)
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The underlying stock price of $0.0013 was used as the fair value of the common stock as at June 30, 2015.
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c)
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The Holder would redeem based on availability of alternative financing 0% of the time increasing 1.0% monthly to a maximum of 10%.
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d)
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The Holder would automatically convert the note at maturity if the registration (after 120 days) was effective and the Company is not in default.
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e)
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The projected annual volatility for each valuation period was based on the historic volatility of the Company of 176% as at December 31, 2013, 175% as at January 11, 2014, 176% as at June 30, 2014, 176% as at August 17, 2014, 170% as at September 30, 2014, 2014, 166% as at October 26, 2014, 168% as at December 2, 2014, 170% as at December 4, 2014, 172% as at December 9, 2014, 183% as at December 31, 2014, 203% as at February 6, 2015, 206% as at February 10, 2015, 209% as at February 13, 2015, 212% as at February 18, 2015, 216% as at February 23, 2015, 222% as at March 2, 2015, 223% as at March 3, 2015, 238% as at March 16, 2015, 240% as at March 17, 2015, 244% as at March 19, 2015, 249% as at March 24, 2015, 251% as at March 25, 2015, and 259% as at March 31, 2015.
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f)
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An event of default would occur 0% of the time, increasing to 1.0% per month to a maximum of 5%. To date, the debenture is not in default nor converted by the Holder.
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Balance, December 31, 2013 | $ | 45,521 | ||
Derivative loss due to new issuances | 105,816 | |||
Adjustment for conversion | (59,911 | ) | ||
Mark to market adjustment | (27,136 | ) | ||
Balance, December 31, 2014 | 70,290 | |||
Adjustment for conversion | (64,767 | ) | ||
Mark to market adjustment | 50,894 | |||
Balance, September 30, 2015 | $ | 56,417 |
5.
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Common Stock
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a)
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On March 5, 2015, the Company issued 200,000,000 common shares with a par value of $200,000 pursuant to a license agreement with a third party to acquire the rights to technologies related to emergency management and communications. As the transaction resulted in a change of control, the par value of the license was allocated to additional paid-in capital. As a result of the completion of the transaction, SirenGPS and Paul Rauner are deemed related parties.
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b)
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On March 5, 2015, the Company issued 106,050,000 common shares with a fair value of $21,210 for the settlement of accounts payable of $733,500 owing to consultants resulting in a gain on settlement of debt of $712,290. As the transaction was pursuant to the agreement which resulted in a change of control, the gain has been recorded to additional paid-in capital.
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c)
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On March 5, 2015, the Company issued 342,150,496 common shares with a fair value of $68,430 for the settlement of $300,000 of principal and $107,479 of accrued interest owing to a company controlled by the former President and CEO of the Company. The transaction resulted in a gain on settlement of debt of $339,049 which was recorded against additional paid-in capital. Refer to Note 7 (a).
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d)
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On March 5, 2015, the Company issued 74,235,000 common shares with a fair value of $14,847 for the settlement of $215,225 owing to the former President and CEO and companies under his control. The transaction resulted in a gain on settlement of debt of $200,378 which was recorded against additional paid-in capital. Refer to Notes 7 and 8.
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e)
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During the period ended March 31, 2015, the Company issued 454,000,000 common shares for the conversion of $20,040 of principal and $2,660 of accrued interest of the July 15, 2013 convertible debenture. As the conversions were within the terms of the agreement, no additional gain or loss was recognized as a result of the conversion.
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f)
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During the period ended March 31, 2015, the Company issued 174,000,000 common shares for the conversion of $8,700 of principal of the October 4, 2013 convertible debenture. As the conversions were within the terms of the agreement, no additional gain or loss was recognized as a result of the conversion.
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g)
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During the period ended June 30, 2015 the Company issued 495,290,000 common shares for the conversion of $25,505 of Principal and interest of the February convertible debenture. As the conversions were within the terms of the agreement, no additional gain or loss was recognized as a result of the conversion.
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h)
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On April 3, 2015, SirenGPS, Inc., and Hillwinds Ocean Energy, LLC, agreed to convert 200,000,000 shares of common stock, and 222,000,000 shares of common stock owned by them into 1,050,000 shares of Class B Preferred Stock, and 1,165,000 shares of Class B Preferred Stock, respectively, in order to facilitate the closing of the other transactions herein described.
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6.
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Preferred Stock
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a)
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On March 5, 2015, the Company issued 13,624,300 Class B preferred stock with a par value of $13,624 pursuant to a license agreement with a third party to acquire the rights to technologies related to emergency management and communications. As the transaction resulted in a change of control, the par value of the license was allocated to additional paid-in capital. As a result of the completion of the transaction, SirenGPS and Paul Rauner are deemed related parties. Each Class B preferred stock is convertible into common stock of the Company at a rate of 200 shares of common stock per each Class B preferred stock.
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b)
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On April 3, 2015, The Company issued 2,215,000 shares of Class B Preferred Stock, see Note 5 (h) above.
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7.
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Related Party Transactions
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a)
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As at September 30, 2015, the Company owes $570 (December 31, 2014 – $0) to the President and CEO of the Company for reimbursement of expenses which has been included in accounts payable and accrued liabilities – related parties. The amount owing is unsecured, non-interest bearing, and due on demand.
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b)
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As at September 30, 2015, the Company owes $6,100 (December 31, 2014 – $0) to the President and CEO of the Company for reimbursement of expenses which has been included in accounts payable and accrued liabilities – related parties. The amount owing is unsecured, non-interest bearing, and due on demand.
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a)
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On December 3, 2015, the Company launched a private placement of Series B shares to raise monies in order to close the asset purchase agreement signed with CMG Holdings Group, Inc.’s majority-owned subsidiary Good Gaming, Inc. announced the prior month. A minimum threshold of $300,000 was required under the agreement as a condition to close. That threshold was not reached by year-end 2015, though commitments for a substantial portion of the round were received on or around December 22, 2015.
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b)
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On November 15, 2015, entered an asset purchase agreement signed with CMG Holdings Group, Inc. to purchase the assets of Good Gaming, Inc. The assets purchase agreement was not closed until February of 2016 due to not meeting the threshold mentioned above..
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c)
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On or around February 18, 2016, a special meeting of the shareholders of the Company was called to change the name of the Company to “Good Gaming, Inc.” The Company subsequently effected the name change with the Secretary of State of Nevada and has submitted an application to FINRA for a name change and ticker change, both of which are pending with a requirement that the Company bring its SEC filings current.
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d)
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On or around February 18, 2016, a minimum funding threshold had been achieved by CMG on behalf of the Good Gaming transaction. Therefore, CMG sold Good Gaming’s assets including intellectual property, software code, computer equipment, brand name and trademarks to the Company.
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e)
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On or around February 18, 2016, the Company executed a settlement agreement with a lender which lowered their amounts due from approximately $100,000 to $25,000 and fixed its conversion price. Additionally, as part of the agreement, the lender funded $100,000 new monies to the Company. Separately, management has negotiated the purchase of a second lender’s debt for $50,000 and aims to consummate that transaction as soon as possible.
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f)
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On or around February 18, 2016, management terminated plans to use a previously filed form 14C to effectuate a share increase to 10 billion, a reverse split of 1-30, and approve 50 billion share stock option plan.
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g)
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On or around February 18, 2016, Paul Rauner resigned his positions of CEO and Director. Additionally, a special meeting of the shareholders of the Company was called, at which time they appointed Vikram Grover to the same positions.
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h)
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On or around February 22, 2016, a special meeting of the shareholders of the Company was called to appoint Barbara Laken and David Dorwart to the Board of Directors and to appoint Barbara Laken as the Company’s Corporate Secretary.
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September 30, | December 31, | |||||||
2015 | 2014 | |||||||
Current Assets | $ | - | $ | 1,093 | ||||
Current Liabilities | 272,306 | 1,435,785 | ||||||
Working Capital (Deficit) | (272,306 | ) | (1,434,692 | ) |
September 30, | September 30, | |||||||
2015 | 2014 | |||||||
Cash Flows from (used in) Operating Activities | $ | (73 | ) | $ | (12,759 | ) | ||
Cash Flows from (used in) Financing Activities | - | 16.000 | ||||||
Net Increase (decrease) in Cash During Period | (73 | ) | 3,441 |
Incorporated by reference | Filed | |||||||||||||||
Number
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Description of Exhibit
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Form
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Date
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Number
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herewith
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|||||||||||
3.1 |
Articles of Incorporation.
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S-1 |
3/24/09
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3.1 | ||||||||||||
3.2 |
Bylaws.
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S-1 |
3/24/09
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3.2 | ||||||||||||
3.3 |
Amended and Restated Articles of Incorporation.
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8-K |
6/14/11
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3.1 | a | |||||||||||
3.4 |
Amended and Restated Articles of Incorporation.
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8-K |
8/17/11
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3.1 | ||||||||||||
10.1 |
Promissory Note issued to HGT Capital LLC. dated
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8-K |
04/21/1515
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10.1 | ||||||||||||
April 15, 2015.
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||||||||||||||||
14.1 |
Code of Ethics.
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10-K |
3/29/11
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14.1 | ||||||||||||
21.1 |
List of subsidiaries
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S-1/A-1 |
1/17/13
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21.1 | ||||||||||||
31.1 |
Certification of Principal Executive Officer and Principal Financial
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X | ||||||||||||||
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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||||||||||||||||
32.1 |
Certification of Chief Executive Officer and Chief Financial Officer
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X | ||||||||||||||
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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||||||||||||||||
101.INS | XBRL Instance Document. | |||||||||||||||
101.SCH | XBRL Taxonomy Extension – Schema. | |||||||||||||||
101.CAL | XBRL Taxonomy Extension – Calculations. | |||||||||||||||
101.LAB | XBRL Taxonomy Extension – Labels. | |||||||||||||||
101.PRE | XBRL Taxonomy Extension – Presentation. | |||||||||||||||
101.DEF | XBRL Taxonomy Extension – Definition. |
HDS INTERNATIONAL CORP. | ||
(the "Registrant") | ||
BY: | VIKRAM GROVE | |
Vikram Grover | ||
President, Principal Executive Officer, | ||
Principal Financial Officer and Principal Accounting Officer |
1.
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I have reviewed this Form 10-Q for the period ended September 30, 2015 of HDS International Corp.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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