HSM Holdings, Inc.
(an exploration stage company)
FINANCIAL STATEMENTS
As Of March 31, 2009
| BALANCE SHEET | F-1 |
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| STATEMENT OF OPERATIONS | F-2 |
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| STATEMENT OF STOCKHOLDERS' EQUITY | F-3 |
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| STATEMENT OF CASH FLOWS | F-4 |
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| FINANCIAL STATEMENT FOOTNOTES | F-5 |
| HSM Holdings, Inc. | |
| (a development stage company) | |
| BALANCE SHEET | |
| (unaudited) | |
| As of March 31, 2009 and December 31, 2008 | |
| | |
| ASSETS | |
| | | | | | | |
| CURRENT ASSETS | | 3/31/2009 | | | 12/31/2008 | |
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Cash | | $ | - | | | $ | - | |
| | | | | | | | | |
Total Current Assets | | | - | | | | - | |
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TOTAL ASSETS | | $ | - | | | $ | - | |
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| LIABILITIES AND STOCKHOLDERS' EQUITY | |
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| CURRENT LIABILITIES | | | | | | | | |
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Accrued Expenses | | $ | 8,750 | | | $ | 8,250 | |
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Total Current Liabilities | | | 8,750 | | | | 8,250 | |
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TOTAL LIABILITIES | | | 8,750 | | | | 8,250 | |
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| STOCKHOLDERS' EQUITY | | | | | | | | |
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Preferred Stock - Par value $0.001; | | | | | | | | |
Authorized: 10,000,000 | | | | | | | | |
None issues and outstanding | | | - | | | | - | |
| | | | | | | | | |
Common Stock - Par value $0.001; | | | | | | | | |
Authorized: 100,000,000 | | | | | | | | |
Issued and Outstanding: 10,000,000 | | | 10,000 | | | | 10,000 | |
| | | | | | | | | |
Additional Paid-In Capital | | | - | | | | - | |
Accumulated Deficit | | | (18,750 | ) | | | (18,250 | ) |
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Total Stockholders' Equity | | | (8,750 | ) | | | (8,250 | ) |
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TOTAL LIABILITIES AND EQUITY | | $ | - | | | $ | - | |
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The accompanying notes are an integral part of these financial statements.
| HSM Holdings, Inc. | |
| (a development stage company) | |
| STATEMENT OF OPERATIONS | |
| (unaudited) | |
| For the three months ending March 31, 2009 and 2008, | |
| and from inception (December 9, 2005) through March 31, 2009 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | 3 MONTHS | | | 3 MONTHS | | | FROM | |
| | | ENDING | | | ENDING | | | INCEPTION | |
| | | 3/31/2009 | | | 3/31/2008 | | | TO 3/31/09 | |
| | | | | | | | | | |
| REVENUE | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| COST OF SERVICES | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| GROSS PROFIT OR (LOSS) | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | |
| GENERAL AND ADMINISTRATIVE EXPENSES | | | 500 | | | | 500 | | | | 18,750 | |
| | | | | | | | | | | | | |
| NET INCOME (LOSS) | | | (500 | ) | | | (500 | ) | | | (18,750 | ) |
| | | | | | | | | | | | | |
| ACCUMULATED DEFICIT, BEGINNING BALANCE | | | (18,250 | ) | | | (15,000 | ) | | | - | |
| | | | | | | | | | | | | |
| ACCUMULATED DEFICIT, ENDING BALANCE | | $ | (18,750 | ) | | $ | (15,500 | ) | | $ | (18,750 | ) |
| | | | | | | | | | | | | |
| Earnings (loss) per share | | $ | (0.0001 | ) | | $ | (0.0001 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted average number of common shares | | | 10,000,000 | | | | 10,000,000 | | | | | |
The accompanying notes are an integral part of these financial statements.
| HSM Holdings, Inc. | |
| (a development stage company) | |
| STATEMENT OF STOCKHOLDERS' EQUITY | |
| (unaudited) | |
| From inception (December 9, 2005) through March 31, 2009 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | COMMON | | | ACCUM. | | | TOTAL | |
| | | SHARES | | | STOCK | | | DEFICIT | | | EQUITY | |
| | | | | | | | | | | | | |
| Stock issued on acceptance | | | 100,000 | | | $ | 100 | | | $ | - | | | $ | 100 | |
| of incorporation expenses | | | | | | | | | | | | | | | | |
| December 9, 2005 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (400 | ) | | | (400 | ) |
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| | | | | | | | | | | | | | | | | |
| Total, December 31, 2005 | | | 100,000 | | | | 100 | | | | (400 | ) | | | (300 | ) |
| | | | | | | | | | | | | | | | | |
| Stock issued as compensation | | | 9,900,000 | | | | 9,900 | | | | - | | | | 9,900 | |
| during September 2006 | | | | | | | | | | | | | | | | |
| for $9,900 or $.001 per share | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (11,350 | ) | | | (11,350 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2006 | | | 10,000,000 | | | | 10,000 | | | | (11,750 | ) | | | (1,750 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (3,250 | ) | | | (3,250 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2007 | | | 10,000,000 | | | | 10,000 | | | | (15,000 | ) | | | (5,000 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (3,250 | ) | | | (3,250 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, December 31, 2008 | | | 10,000,000 | | | $ | 10,000 | | | $ | (18,250 | ) | | $ | (8,250 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | | | | | | | | | | (500 | ) | | | (500 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total, March 31, 2009 | | | 10,000,000 | | | $ | 10,000 | | | $ | (18,750 | ) | | $ | (8,750 | ) |
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The accompanying notes are an integral part of these financial statements.
HSM Holdings, Inc.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
1. Summary of significant accounting policies:
Industry:
HSM Holdings, Inc. (the Company), a Company incorporated in the state of Delaware as of December 9, 2005 plans to locate and negotiate with a business entity for the combination of that target company with The Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that The Company will be successful in locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or domestic private company to become a reporting ("public") company whose securities are qualified for trading in the United States secondary market.
The Company has adopted its fiscal year end to be December 31.
Results of Operations and Ongoing Entity:
The Company is considered to be an ongoing entity for accounting purposes; however, there is substantial doubt as to the Company's ability to continue as a going concern. The Company's shareholders fund any shortfalls in The Company's cash flow on a day to day basis during the time period that The Company is in the development stage.
Liquidity and Capital Resources:
In addition to the stockholder funding capital shortfalls; The Company anticipates interested investors that intend to fund the Company's growth once a business is located.
Cash and Cash Equivalents:
The Company considers cash on hand and amounts on deposit with financial institutions which have original maturities of three months or less to be cash and cash equivalents.
Basis of Accounting:
The Company's financial statements are prepared in accordance with U.S. generally accepted accounting principles.
HSM Holdings, Inc.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
Income Taxes:
The Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when in the opinion of management; it is more likely than not that some portion or all of the deferred tax assets will not be realized. At this time, The Company has set up an allowance for deferred taxes as there is no company history to indicate the usage of deferred tax assets and liabilities.
Fair Value of Financial Instruments:
The Company's financial instruments may include cash and cash equivalents, short-term investments, accounts receivable, accounts payable and liabilities to banks and shareholders. The carrying amount of long-term debt to banks approximates fair value based on interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities. The carrying amounts of other financial instruments approximate their fair value because of short-term maturities.
Concentrations of Credit Risk:
Financial instruments which potentially expose The Company to concentrations of credit risk consist principally of operating demand deposit accounts. The Company's policy is to place its operating demand deposit accounts with high credit quality financial institutions. At this time The Company has no deposits that are at risk.
2. Related Party Transactions and Going Concern:
The Company's financial statements have been presented on the basis that it is a going concern in the development stage, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At this time The Company has not identified the business that it wishes to engage in.
The Company's shareholder funds The Company's activities while The Company takes steps to locate and negotiate with a business entity for combination; however, there can be no assurance these activities will be successful.
3. Accounts Receivable and Customer Deposits:
Accounts receivable and Customer deposits do not exist at this time and therefore; have no allowances accounted for or disclosures made.
HSM Holdings, Inc.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
4. Use of Estimates:
Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Management has no reason to make estimates at this time.
5. Revenue and Cost Recognition:
The Company uses the accrual basis of accounting in accordance with generally accepted accounting principles for financial statement reporting.
6. Accrued Expenses:
Accrued expenses consist of accrued legal, accounting and office costs during this stage of the business.
7. Operating Lease Agreements:
The Company has no agreements at this time.
8. Stockholder's Equity:
Preferred stock includes 10,000,000 shares authorized at a par value of $0.001, of which none are issued or outstanding.
Common Stock includes 100,000,000 shares authorized at a par value of $0.001, of which 100,000 have been issued for the amount of $100 on December 9, 2005 in acceptance of the incorporation expenses for the Company.
On September 19, 2006 the Company issued 1,905,000 shares of common stock as compensation to an officer of the Company for a value of $1,905, or $.001 per share. These shares are considered restricted shares as section 144 of the Securities Exchange Commission.
On September 19, 2006 the Company issued 80,000 shares of common stock as compensation to an officer of the Company for a value of $80, or $.001 per share. These shares are considered restricted shares as section 144 of the Securities Exchange Commission.
On September 19, 2006 the Company issued 7,915,000 shares of common stock as compensation to an officer and director of the Company for a value of $7,915, or $.001 per share. These shares are considered restricted shares as section 144 of the Securities Exchange Commission.
9. Required Cash Flow Disclosure for Interest and Taxes Paid:
The company has paid no amounts for federal income taxes and interest. The Company issued 100,000 common shares of stock to its sole shareholder in acceptance of the incorporation expenses for the Company.
HSM Holdings, Inc.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
10. Earnings Per Share:
Basic earnings per share ("EPS") is computed by dividing earnings available to common shareholders by the weighted-average number of common shares outstanding for the period as required by the Financial Accounting Standards Board (FASB) under Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Shares". Diluted EPS reflects the potential dilution of securities that could share in the earnings.
11. Income Taxes:
The Company has available net operating loss carryforwards for financial statement and federal income tax purposes. These loss carryforwards expire if not used within 20 years from the year generated. The Company's management has decided a valuation allowance is necessary to reduce any tax benefits because the available benefits are more likely than not to expire before they can be used. These net operating losses expire as the following, $400 at 2025, $11,350 at 2026, $3,250 at 2027, $3,250 at 2028 and $500 at 2029.
The Company has available net operating loss carry-forwards for financial statement and federal income tax purposes. These loss carry-forwards expire if not used within 20 years from the year generated. The Company's management has decided a valuation allowance is necessary to reduce any tax benefits because the available benefits are more likely than not to expire before they can be used.
The Company's management determines if a valuation allowance is necessary to reduce any tax benefits when the available benefits are more likely than not to expire before they can be used. The tax based net operating losses create tax benefits in the amount of $3,750 from inception through March 31, 2009.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of March 31, 2009 are as follows:
| Deferred tax assets: | | | |
| Federal net operating loss | | $ | 2,813 | |
| State net operating loss | | | 937 | |
| | | | | |
| Total Deferred Tax Asset | | | 3,750 | |
| Less valuation allowance | | | (3,750 | ) |
| | | | 0 | |
The reconciliation of the effective income tax rate to the federal statutory rate is as follows:
| Federal income tax rate | | | 15.0 | % |
| State tax, net of federal benefit | | | 5.0 | % |
| Increase in valuation allowance | | | (20.0 | %) |
| | | | | |
| Effective income tax rate | | | 0.0 | % |
12. Subsequent Events:
None known at this time.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Plan of Operation
The Registrant is continuing its efforts to locate a merger candidate for the purpose of a merger. It is possible that the registrant will be successful in locating such a merger candidate and closing such merger. However, if the registrant cannot effect a non-cash acquisition, the registrant may have to raise funds from a private offering of its securities under Rule 506 of Regulation D. There is no assurance the registrant would obtain any such equity funding.
Results of Operation
The Company did not have any operating income from inception through March 31, 2009. For the three months ended March 31, 2009, the registrant recognized a net loss of $500 and for the period from inception through March 31, 2009, the registrant recognized a net less of $18,750. Some general and administrative expenses during the quarter were accrued. Expenses for the quarter were comprised of costs mainly associated with legal, accounting and office.
Liquidity and Capital Resources
At March 31, 2009 the Company had no capital resources and will rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses pending acquisition of an operating company.
Critical Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our market risk is limited to the United States domestic, economic and regulatory factors.
Item 4T. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There have been no changes in the Company's internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Currently we are not aware of any litigation pending or threatened by or against the Company.
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits.
31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002
31.2 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002
32.2 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | HSM HOLDINGS, INC. |
| | |
| Date: May 8, 2009 | By: | /s/ Anthony Hu |
| | | Anthony Hu |
| | | Chief Executive Officer |
