SNPK Financials

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Case Study: Scam, Fantasy or FraudTake your pick.

This case is a series of press releases and recent financial filings of SNPK. To receive an A+ plus an
email prizepoint out what in the financial statement would cause any shareholder (God, forbid if you were a shareholder thinking this was a good long-term investment) to become ill. What strikes you as particularly toxic for the common shareholders? Also, list three or four Red Flags
that you as a potential investor would notice. Tomorrow, I will post my analysis of these documents. You should be able to skim through the 100 pagesskipping over the superfluousand find the key areas to look at. We are in the dark world of Penny stocks, pump and dump frauds, and mafia-controlled stockfar, far away from investing in franchise companies like IBM. But inverting and looking at the underbelly of the stock market can teach us lessons. Yes, what to avoid, but also about human nature. I am asked to be placed on Penny stock email lists because occasionally I find wonderful shorts. This example is not an example of what to short but how to find trouble in a financial statement.
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Form 8-K SUNPEAKS VENTURES, INC. - SNPK Filed: March 06, 2012 (period: March 01, 2012) Report of unscheduled material events or corporate changes.
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press release March 12, 2012, 4:05 p.m. EDT
1 Sunpeaks Ventures Comments on Current U.S. Prescription Drug Shortage Crisis
SILVER SPRING, Md., March 12, 2012 /PRNewswire via COMTEX/ -- Sunpeaks Ventures, Inc. /quotes/zigman/7619777 SNPK +17.63% (pinksheets:SNPK) (the "Company" or "Sunpeaks Ventures") and its wholly owned subsidiary Healthcare Distribution Specialists, LLC ("HDS") are pleased to provide this commentary regarding the current prescription drug shortage crisis taking place across the United States. According to both the U.S. Food and Drug Administration ("FDA") and the General Accounting Office ("GAO"), the United States is experiencing a record number of prescription drug shortages. The number of drug shortages has continued to grow substantially since 2006. Data collected by the University of Utah Hospital's Drug Information Service indicates that 1,190 prescription drug shortages were reported from January 1, 2001 through June 20, 2011. Of these, 64% of shortages involved drugs that were in short supply more than one prior time. On average, drug shortages lasted an astounding 286 days (over 9 months). Over half of all shortages reported from January 1, 2009, through June 20, 2011, were identified as critical, because, for example, alternative drugs were not available or involved older generic sterile injectable drugs. Certain therapeutic classes such as anesthetics, oncology (cancer), and anti-infective drugs (antivirals, anthelmintics, and vaccines) were among those most often in short supply. The prescription drug shortage in the United States became mainstream news in late 2011, when President Obama signed an Executive Order directing the FDA to take action to help further prevent and reduce prescription drug shortages, protect consumers, and prevent price gouging. The President's order directed the FDA to broaden reporting of potential shortages of certain prescription drugs and to further expedite regulatory reviews that can help prevent or respond to shortages. Under the President's order, FDA will also work with to the Department of Justice, which will examine whether potential shortages have led to illegal price gouging or stockpiling of life-saving medications. President Obama stated, "The shortage of prescription drugs drives up costs, leaves consumers vulnerable to price gouging, and threatens our health and safety. This is a problem we can't wait to fix. That's why today, I am directing my administration to take steps to protect consumers from drug shortages, and I'm committed to working with Congress and industry to keep tackling
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this problem going forward." "The prescription drug shortage in America has reached near epidemic proportions and it's adversely affecting vulnerable patients and threatening families across the country. Many of these shortages involve cancer drugs, anesthetics used for patients undergoing surgery, as well as drugs needed for emergency medicine, and patients on IV," stated Mackie A. Barch, CEO of Sunpeaks. "We believe that a key element to any long-term solution to the shortage problem is a strong secondary wholesale market for prescription drugs. Our wholly-owned subsidiary, HDS, is positioned to become a potential leader in the secondary wholesale market for prescription drugs and intends to work closely with healthcare providers nationwide to identify and provide innovative solutions to prevent shortages for our growing list of clients." About Sunpeaks Ventures, Inc. Sunpeaks Ventures, Inc. and its wholly owned subsidiary Healthcare Distribution Specialists, LLC ("HDS"), is a nationally focused, value-added distributor of specialty drugs and over-the-counter ("OTC") branded multivitamins to the healthcare provider market. HDS also owns and markets Clotamin, a specialized over-the-counter multivitamin product designed exclusively for use by patients also on Warfarin, a popular blood thinner that has a long list of known adverse drug and food interactions. For additional information, please visit www.sunpeaksventures.com . Contact: Financial Insights 888-248-8491 or info@sunpeaksventures.com
Table of Contents
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8-K - FORM 8-K CURRENT REPORT ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES. ITEM 8.01 OTHER ITEMS. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. SIGNATURES EX-99.1 (EXHIBIT 99.1 SUNPEAKS INITIAL FUNDING)
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): March 1, 2012 SUNPEAKS VENTURES, INC. (Exact name of registrant as specified in its charter)
Nevada (State or other jurisdiction of Incorporation)
000-54523 (Commission File Number)
27-0777112 (IRS Employer Identification Number)
9337 Fraser Ave. Silver Spring, MD 20910 (204) 898-8160 (Address of principal executive offices)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: . Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) . Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) . Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) . Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 3.02
UNREGISTERED SALES OF EQUITY SECURITIES.
On March 1, 2012, Sunpeaks Ventures, Inc. (we or the Company) issued a 10% convertible note in with an original principal amount of $200,000 (the Note) to an investor. The Note provides for an interest rate of ten percent (10%) and matures on March 1, 2014. The Note is convertible into shares of our common stock, par value $0.001, based on a conversion price that is equal to a twenty
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percent (20%) discount to the average market price over a ten (10) day period immediately prior to the conversion date. The issuance of the Note was offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. ITEM OTHER ITEMS. 8.01 On March 2, 2012, we issued a press release entitled Sunpeaks Ventures Secures Initial Funding of $200,000. A copy of the press release is attached as Exhibit 99.1, and incorporated herein by reference. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d)
Exhibits. The following exhibit is furnished herewith:
Exhibit Number 99.1
Description Press Release titled Sunpeaks Ventures Secures Initial Funding of $200,000 dated March 2, 2012.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 6, 2012 SUNPEAKS VENTURES, INC. By: /s/ Mackie Barch Mackie Barch President and Chief Executive Officer
Exhibit 99.1 Sunpeaks Ventures Secures Funding of $200,000 SILVER SPRING, Md., March 2, 2012 /PRNewswire/ -- Sunpeaks Ventures, Inc. (OTCBB: SNPK) (PINKSHEETS: SNPK) (the "Company" or "Sunpeaks Venutres") is pleased to announce that it has completed an initial financing of $200,000. The proceeds from this financing will be used for general working capital and other such purposes as the Company may determine from time to time. "The most important reason to become a publicly traded company is to access additional growth capital on more attractive terms," stated Mr. Mackie Barch, President and CEO of Sunpeaks Ventures. "This initial financing and future potential capital raises will fuel our corporate growth and help position the Company as leaders in the hard-to-find and specialty drug distribution sector." Further updates regarding Sunpeaks Ventures and HDS will be made as additional information becomes available.
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About Sunpeaks Ventures, Inc. Sunpeaks Ventures, Inc. and its wholly owned subsidiary Healthcare Distribution Specialist, LLC ("HDS"), is a nationally focused, value-added distributor of specialty drugs and over-the-counter ("OTC") branded multivitamins to the healthcare provider market. HDS also owns and markets Clotamin, a specialized over-the-counter multivitamin product designed exclusively for use by patients also on Warfarin, a popular blood thinner that has a long list of known adverse drug and food interactions. For additional information, please visit www.sunpeaksventures.com. Contact: Financial Insights 888-248-8491 or info@sunpeaksventures.com Safe Harbor Statement Information in this document constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast", "anticipate", "estimate", "project", "intend", "expect", "should", "believe", and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve, and are subject to known and unknown risks, uncertainties and other factors which could cause Sunpeaks Ventures' actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. The risks, uncertainties and other factors are more fully discussed in Sunpeaks Ventures' filings with the U.S. Securities and Exchange Commission. All forward-looking statements attributable to Sunpeaks Ventures herein are expressly qualified in their entirety by the above-mentioned cautionary statement. Sunpeaks Ventures disclaims any obligation to update forward-looking statements contained in this estimate, except as may be required by law.
_____________________________________ Created by Morningstar Document Research http://documentresearch.morningstar.com Source: SUNPEAKS VENTURES, INC., 8-K, March 06, 2012
Form 8-K SUNPEAKS VENTURES, INC. - SNPK Filed: February 17, 2012 (period: February 13, 2012) Report of unscheduled material events or corporate changes.
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Table of Contents
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8-K - FORM 8-K CURRENT REPORT ITEM 1.01 part_1_2_1 ITEM 2.01 part_1_2_2 Item 2.01(f) of Form 8-K states that if the registrant was a shell company like we were immediately before the transaction disclosed under Item 2.01, then the registrant must disclose the information that would be required if the registrant were filing a ITEM 2.03 part_1_2_4 ITEM 3.02 part_1_2_5 ITEM 5.01 part_1_2_6 ITEM 5.02 part_1_2_7 ITEM 5.06 part_1_2_8 ITEM 8.01 part_1_2_9 ITEM 9.01 part_1_2_10 EX-10.07 (EXHIBIT 10.7 PROMISSORY NOTE) EX-10.08 (EXHIBIT 10.8 SETTLEMENT AGREEMENT) EX-10.09 (EXHIBIT 10.9 SETTLEMENT AGREEMENT) EX-10.10 (EXHIBIT 10.10 SHARE EXCHANGE AGREEMENT) EX-10.12 (EXHIBIT 10.12 MANAGEMENT AGREEMENT) EX-10.13 (EXHIBIT 10.13 LEASE AGREEMENT) EX-21.1 (EXHIBIT 21.1 LIST OF SUBSIDIARIES) EX-99.1 (EXHIBIT 99.1 AUDITED CONSOLIDATED FINANCIAL STATEMENTS) EX-99.2 (EXHIBIT 99.2 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS)
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 13, 2012 SUNPEAKS VENTURES, INC. (Exact name of registrant as specified in its charter)
Nevada (State or other jurisdiction of Incorporation)
000-54523 (Commission File Number)
27-0777112 (IRS Employer Identification Number)
9337 Fraser Ave. Silver Spring, MD 20910 (204) 898-8160 (Address of principal executive offices)
#106, 505 19 Ave SW Calgary, Alberta, T2S 0E4 Canada (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: . Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) . Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) . Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) . Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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FORWARD LOOKING STATEMENTS This current report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future results of operation or future financial performance, including, but not limited to, the following: statements relating to our ability to raise sufficient capital to finance our planned operations for the next 12 months. In some cases, you can identify forward-looking statements by terminology such as may, should, intends, expects, plans, anticipates, believes, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors in this current report, which may cause our or our industrys actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances or to reflect the occurrence of unanticipated events. In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock. As used in this current report (the Report) and unless otherwise indicated, the terms we, us, our, the Company and SNPK, and Sunpeaks refer to Sunpeaks Ventures, Inc. As used herein, Clotamin is a registered trademark of Healthcare Distribution Specialists, LLC. As used herein, Coumadin is a registered trademark of Bristol-Myers Squibb Pharma Company and Sunpeaks Ventures, Inc. expressly disclaims any right thereto. ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT Share Exchange Agreement On February 13, 2012, Sunpeaks Ventures, Inc., a Nevada corporation entered into that certain Share Exchange Agreement (the Share Exchange Agreement) with Healthcare Distribution Specialists LLC, a Delaware limited liability company, (HDS), Mackie Barch, the mmanaging member of HDS, who presently owns 100% of the issued and outstanding membership interests in HDS, and Scott Beaudette, the majority shareholder of the Company. Pursuant to the terms and conditions of the Share Exchange Agreement, HDS shall exchange 100% of the outstanding membership interests in HDS in exchange for: (i) two hundred million (200,000,000) newly-issued restricted shares of the Companys common stock, par value $0.001 per share and (ii) three million (3,000,000) newly-issued restricted shares of the Companys Class A Preferred Stock, par value $0.001 per share. The exchange will result in HDS becoming a wholly-owned subsidiary of the Company. Additionally, pursuant to the Share Exchange Agreement, Mr. Beaudette shall cancel two hundred million (200,000,000) shares of the Companys common stock that he currently owns. As a result of the Share Exchange Agreement, the Company will now conduct all current operations through Healthcare Distribution Specialists LLC, and our principal business became the business of HDS. The foregoing summary description of the terms of the Share Exchange Agreement may not contain all information that is of interest to the reader. For further information regarding the terms and conditions of the Share Exchange Agreement, this reference is made to such agreement, which is filed as Exhibit 10.10 hereto and is incorporated herein by this reference. CH Settlement Agreement On February 13, 2012, the Company entered into a Settlement Agreement and General Mutual Release (the CH Settlement Agreement) with Carrillo Huettel, LLP (CH). Pursuant to the terms of the CH Settlement Agreement, the Company paid $4,000 in full satisfaction of a debt owed to CH for legal services rendered to the Company. The foregoing summary description of the terms of the CH Settlement Agreement may not contain all information that is of interest. For further information regarding the terms and conditions of the CH Settlement Agreement, reference is made to such agreement, which is filed as Exhibit 10.9, hereto, and is incorporated by reference.
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Beaudette Settlement Agreement On February 13, 2012, the Company entered into a Settlement Agreement and General Mutual Release (the Beaudette Settlement Agreement) with Scott Beaudette (Mr. Beaudette). Pursuant to the terms of the Beaudette Settlement Agreement, the Company paid $5,000 in full satisfaction of a debt owed to Mr. Beaudette for funds he lent to the Company. The foregoing summary description of the terms of the Beaudette Settlement Agreement may not contain all information that is of interest. For further information regarding the terms and conditions of the Beaudette Settlement Agreement, reference is made to such agreement, which is filed as Exhibit 10.8, hereto, and is incorporated by reference. Whetu Settlement Agreement On February 13, 2012, the Company entered into a Settlement Agreement and General Mutual Release (the Whetu Settlement Agreement) with Whetu, Inc. (Whetu). Pursuant to the terms of the Whetu Settlement Agreement, the Company shall issue fifty million (50,000,000) restricted shares of its common stock to Whetu for the cancellation of that certain Promissory Note (the Whetu Note) issued by the Company in favor of Whetu on July 13, 2011 to evidence funds previously loaned by Whetu. The Whetu Note had a principal amount of one hundred ten thousand ($110,000) and accrued simple interest at a rate of ten percent (10%) per annum and was due and payable on demand upon ten (10) days written notice. The foregoing summary description of the terms of the Whetu Settlement Agreement may not contain all information that is of interest. For further information regarding the terms and conditions of the Whetu Settlement Agreement, reference is made to such agreement, which is filed as Exhibit 10.11, hereto, and is incorporated by reference. Management Agreement On February 13, 2012, the Company into a Management Agreement (the Management Agreement) with Mackie Barch, whereby Mr. Barch shall serve as the Companys President, Chief Executive Officer, and Director for one year. Thereafter, the Management Agreement shall automatically renew for successive one year periods, or until Mr. Barch delivers 30 days advanced written notice of his intent to resign. As compensation for such services, Mr. Barch shall receive a monthly fee of $1,000 per calendar month. Such fee shall be payable on the first day of each calendar quarter. The foregoing summary description of the terms of the Management Agreement may not contain all information that is of interest. For further information regarding the terms and conditions of the Management Agreement, reference is made to such agreement, which is filed as Exhibit 10.12, hereto, and is incorporated by reference. ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS. The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference. FORM 10 DISCLOSURE As a result of the Share Exchange Agreement (the "Transaction"), our current business operations shall be conducted through our wholly-owned subsidiary, Healthcare Distribution Specialists LLC, and our principal business is now that of Healthcare Distribution Specialists LLC. Accordingly, Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as we were, immediately before the transaction, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Pursuant to Item 2.01(f) of Form 8-K, we are providing the following information that would be included in general form for the registration of securities on Form 10. Please note that the information provided below relates to the combined enterprises after the closing of the Transaction, except that information relating to periods prior to the date of the Transaction only relates to the Registrant unless otherwise specifically indicated.
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ITEM 1. BUSINESS Corporate History The Company was incorporated in the State of Nevada on June 25, 2009. Since inception we have had minimal operations and as such we were considered a "shell company" as that term is defined under Rule 405 of the Securities and Exchange Act of 1934. It was our initial intention to be a as an independent crude oil and natural gas exploration company; however, due to the lack of revenues and adequate financing, we abandoned our business plan and began seeking out potential acquisitions, joint ventures and/or strategic relationships. Thereafter, the Company entered into the Share Exchange Agreement with HDS, Mackie Barch and Mr. Beaudette. Pursuant to the terms and conditions of the Share Exchange Agreement, (i) HDS exchanged 100% of the issued and outstanding membership interests in HDS for: two hundred million (200,000,000) newly-issued restricted shares of the Companys common stock and (ii) three million (3,000,000) newly-issued restricted shares of the Companys Class A Preferred Stock, resulting in the acquisition of HDS by the Company. As a result of the Share Exchange Agreement, our new business operations shall be conducted through our wholly-owned subsidiary, HDS and our principal business is now that of HDS, which is described in greater detail below. HDS Company Overview HDS was incorporated in the State of Delaware on September 19, 2008 under the name AmeriSure Pharmaceuticals, LLC and on July 28, 2011 it changed its name to Healthcare Distribution Specialists LLC. HDS is a value-added distributor of hard-to-find and specialty drugs to the healthcare provider market, while functioning as an aggregator of real-time market demand for these products. Simply stated, we are a marketing-driven sales organization focused on originating a high volume of special orders from a wide customer base. Due to our established vendor relationships and focused business model, we have the ability to source these products and expeditiously fill orders within narrow time frames. In addition to our distribution business, we also own and sell a specialized over-the-counter multivitamin product called Clotamin. Clotamin is specifically designed for use by patients on Warfarin, a blood thinner that has a known interaction with the vitamin K present in standard over-the-counter multivitamins. The U.S. Drug Wholesaling Industry The U.S. drug wholesaling industry is a $300 billion industry that is evolving faster than ever. (2011-12 Economic Report on Pharmaceutical Wholesalers by Adam J. Fein, Ph.D., September 2011). In the U.S. drug wholesaling industry the three largest drug wholesalers distribute more than 85% of all prescription drugs in the United States. (Statement of Adam J. Fein, President, Pembroke Consulting, Inc. to the U.S. House of Representatives Committee on the Judiciary Subcommittee on Intellectual Property, Competition, and the Internet; The Proposed Merger between Express Scripts and Medco, September 20, 2011). The approximate 15% market share remaining represents a rapidly growing $45 billion distribution market for hard-to-find and specialty pharmaceuticals primarily in the biopharmaceutical arena, and it is in this market that HDS target customers are located. Principal Services and Products Due to the complexity of the specialty drug discovery process, these drugs are difficult and expensive to manufacturer, and there are typically no generic alternatives. HDS is a wholesale distributor of a wide range of over 6,000 of these specialty drugs. HDS currently provides three primary distribution services and owns one over-the-counter (OTC) product: 1. Distribution Services a. Sourcing and Distribution of Hard-To-Find Pharmaceuticals HDS plays the role of special purchasing agent and procurement expediter for its customers. HDS contacts various suppliers within the industry supply chain in order to find certain hard-to-find pharmaceuticals and facilitates rapid delivery of such pharmaceuticals usually within 24 to 48 hours. The hard-to-find segment is projected to grow significantly due to the high projected demand, manufacturing shortages, regional shortages, and the increasing off-label use for biopharmaceutical drugs and their quota-like system of allocation.
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Additionally, most hospitals carry lean stocks due to the high carrying cost of the drugs. This tight supply chain results in the frequent need by providers to access the spot, hard-to-find market to rebalance supply with demand. When this happens, hospitals are under timing pressure to obtain the products quickly, often regardless of pricing. b. Sourcing and Distribution of Blood Plasma Derivatives, Specialty Products, Vaccines, and Anti-Infectives Worldwide demand for plasma derivative products (made from bio-engineered proteins and blood derivates), such as Intravenous Immunoglobulin (IVIG), coagulation factors, and albumin is growing strongly due to increased use and emerging medical applications for these drugs. Historically, IVIG was targeted at treatment of auto-immune diseases, but therapies such as treatment for Alzheimers and other immune deficiencies are contributing to a significant increase in demand for IVIG. Manufacturers have historically not been able to increase production in time to meet increased demand. Many of these disorders have no cure, and as a result, patients often receive treatment for the symptoms for decades, thereby creating long use cycles for these products. HDS primary product distribution categories include plasma derivatives, specialty products, vaccines, and anti-infectives. Plasma derivatives are used to treat complex and serious medical conditions such as cancer, hemophilia, rheumatoid arthritis, multiple scleroses, blood disorders, hepatitis, and HIV. Specialty products include a wide variety of drugs used to treat respiratory, oncology, cardiovascular, and hormonal syndromes. These specialty products are highly differentiated from traditional pharmaceuticals (oral solids) because they are significantly more costly than traditional pharmaceuticals and often require specialized handling such as refrigeration and tight cold-chain management. Healthcare providers, despite having primary sources of distribution for these products, routinely encounter shortages that can put patients at risk. When hospitals are in need of these drugs, it can often be a lifesaving situation requiring quick turnaround and reliable service. Despite a steadily growing need for these products, hospitals are often unable to increase supply allocations, resulting in market disequilibrium and the need to purchase in the hard-to-find market. c. Sourcing and Distribution of Select Traditional Pharmaceuticals HDS also offers catalogue sales of traditional pharmaceutical products to its distribution customers. These products include antibiotics, vaccines, and other oral and injectable pharmaceuticals. These product sales opportunities arise when vendors offer HDS special pricing or exclusivity on certain product lines. 2. Clotamin a Multivitamin for Patients on Blood Thinners HDS owns 100% of the rights, title, and interest to Clotamin, an OTC multivitamin for patients on Warfarin. The Companys predecessor introduced Clotamin in early 2008 to answer an unmet need for patients on anticoagulants (popularly referred to as blood thinners), such as Warfarin and related 4-hydroxycoumarin-containing molecules. Patients on such blood thinners are primarily impacted by their Potassium (K+) level, and to a lesser degree their A, D, and E levels, and are therefore cautioned to monitor their intake of these vitamins. The patients International Normalized Ratio (INR) can be raised or lowered based upon the amount of available Potassium (vitamin K), which can cause either excessive bleeding or clotting, respectively. Clotamin is the first multivitamin in the commercial market that is manufactured without vitamin K and with reduced amounts of A, D, and E, specifically to respond to the multivitamin needs of patients on Warfarin. HDS Competitive Position in the Industry Sourcing and Distribution Services HDS has a range of competitors including specialized subsidiaries of the traditional distributors and other independent specialty distributors. Most of its competition comes in the form of other independents such as Novis, Atlantic, and Jace. These companies compete on the basis of the states in which they are licensed or certified to conduct business, their access to specialty
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products, their customer care and service, the product distribution agreements they have secured, and the cost of specialty products. There are many barriers to enter the independent specialist segment, including obtaining federal and state licenses and various accreditations, establishing credibility with customers, building a network of manufacturers and vendors, having the high level of operational and logistic expertise, as well as the specialized information technology required. HDS has built its reputation on deep industry relationships and a commitment to patient safety and product integrity.
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The primary sales process is outbound telemarketing, and is aimed at generating repeat business from customers while becoming their go-to resource for hard-to-find biopharmaceuticals. The sales model is based on low costs and high productivity and has successfully driven new account acquisition and repeat business. Since June 2011, HDS has distributed products to a rapidly growing customer base of more than 150 unique customers. Sales reps typically make an average of 100 calls per day to assess the needs of current and prospective customers. Each sales rep is accountable for building and maintaining individual relationships with customers. Product knowledge and high-touch customer service is required to gain customer trust and maintain customer satisfaction. Due to HDS systematic approach to order fulfillment, management estimates a 99% on-time delivery success rate. Currently, HDS is several steps removed from the manufacturers in the value chain, resulting in higher costs and the inability to carry certain products. To limit this effect, we have begun establishing direct sourcing relationships with manufacturers. These relationships will enable the company to significantly reduce its sourcing costs and have access to a wider line of products. Further, we believe that developing direct sourcing will provide reduced sourcing costs and improved margins for the Companys main product lines, and an increase in the size of the product portfolio. We may be able to direct source our products by partnering with specialty pharmacies and purchasing product directly from them. We believe that by adding specialty pharmacy capabilities to the business model, HDS will be able to move further up the value chain, providing it with a superior cost position and stronger access to new product lines. Clotamin Since 2008, Clotamin has acquired retail customers through its website, www.clotamin.com, and is offered for sale in pharmacies nationwide. In terms of distribution, Clotamin is available from all the major regional wholesalers, including: Dik Drug Co., H.D. Smith, , Miami-Luken, N.C. Mutual Wholesale Drug Co, Prescription Supply, Inc, Rochester Drug Cooperative, Smith Drug Company, Valley Wholesale Drug Company, and Value Drug Company. HDS plans on leveraging its sales staff to grow the brand in hospitals and pharmacies. HDS engaged pharmaceutical distribution consultant, Rx Distribution, to help gain access to the large chain stores and major wholesalers. In addition, Clotamin has signed an exclusive deal with The National Community Pharmacists Association (NCPA). NCPA has endorsed the product and is actively promoting it to their members. Founded in 1898 as the National Association of Retail Druggists (NARD), NCPA represents the pharmacist owners, managers, and employees of more than 23,000 independent community pharmacies across the United States. The nation's independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation's retail prescription medicines. A portion of all proceeds are given to The National Blood Clot Alliance (NBCA), formerly known as the National Alliance for Thrombosis and Thrombophilia (NATT). NBCA is a patient-led, voluntary health advocacy organization, and its volunteers include many of the nation's foremost experts on blood clots and blood clotting disorders. NBCAs Medical and Scientific Advisory Board includes nationally recognized experts on thrombosis and thrombophilia. HDS plans on doing hyper-targeted Clotamin marketing to Warfarin patients to drive sales to chain stores. This will be done via direct-to-consumer marketing using direct mail, radio, and television campaigns, and via aggressive marketing to major practitioners through trade shows and conferences. HDS also plans to market and distribute the brand internationally. Government Approvals and Regulations Sourcing and Distribution Services HDS is currently licensed to distribute pharmaceuticals in 27 states, with registrations pending in other states. Currently licensed states are: Alabama, Alaska, Arkansas, Colorado, Delaware, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New Mexico, North Carolina, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and Washington DC. Clotamin FDA: As Clotamin is an Over the Counter Dietary Supplement, the FDA does not need to provide regulatory approval before it can be sold and marketed. Unlike drug products, there are no provisions in the law for the FDA to approve dietary supplements for safety or effectiveness before they reach the consumer. Once a dietary supplement is marketed, FDA has to prove that the product is not safe in order to restrict its use or remove it from the market.
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The U.S. Food and Drug Administration (FDA) is also responsible for safety and labeling of dietary supplements. According to FDA guidelines, ingredients that were sold in the US prior to October 15, 1994 are not required to be reviewed for safety by the FDA before being marketed. All the ingredients in Clotamin were sold prior to this date, and therefore do not require FDA review. According to FDA guidelines, any health claims or nutrient content claims for products require FDA approval. Structure-function claims do not require FDA approval, but must be accompanied by the following disclaimer on the label: This statement has not been evaluated by the FDA. This product is not intended to diagnose, treat, cure or prevent disease. All of the claims made for Clotamin are structure-function claims and therefore do not require FDA approval, and the Clotamin label has the following disclaimer: These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease. FTC: The Federal Trade Commission (FTC) requires Dietary Supplement claims of safety and efficacy to be supported by, competent and reliable scientific evidence. Clotamin does not make any safety or efficacy claims. Insurance Due to the nature of the business conducted by the Company in the past, we do not currently maintain any insurance. However, we intend to acquire and maintain insurance appropriate to our new activities in the future on such terms that management shall deem to be commercially reasonable. HDS, our wholly-owned subsidiary, currently maintains a package insurance policy with CNA which includes general liability insurance with a $2,000,000 aggregate and $1,000,000 occurrence limit; property insurance; and, a $1,000,000 hired and non-owned auto liability limit. Additionally, HDS has a Workers Compensation policy; however, such policies may be insufficient to cover all claims and/or losses. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts Pursuant to the Share Exchange Agreement, we acquired the following Intellectual Property rights. Trademark: MARK Clotamin Employees The Company currently has no employees, other than our sole officer and director, Mr. Barch. Our wholly-owned subsidiary, HDS, currently has 9 employees, including Mr. Barch. However, we intend to seek out and identify qualified persons to assist the Company in implementing its new business plan and operations. WHERE YOU CAN GET ADDITIONAL INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SECs Public Reference Room, located at 100 F Street, N.W., Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SECs web site, www.sec.gov . REG./APP. NO REG./ DATE 3467127 APP. JURISDICTION United States
July 15, 2008
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ITEM 1A. RISK FACTORS RISKS RELATED TO OUR COMPANY Because Mr. Mackie Barch currently owns 47.56% of our outstanding Common Stock, and 100% of our outstanding Preferred Stock, investors may find that corporate decisions influenced by Mr. Barch are inconsistent with the best interests of other stockholders. Mr. Barch, our sole officer and director, currently owns 47.56% of our outstanding Common Stock, and 100% of our outstanding Preferred Stock. Due to the 100:1 voting rights of the Class A Preferred Stock, Mr. Barch holds 69.40% of the voting rights of all issued and outstanding stock of the Company. Accordingly, Mr. Barch will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. While we have no current plans with regard to any merger, consolidation or sale of substantially all of our assets, the interests of Mr. Barch may still differ from the interests of the other stockholders. Key management personnel may leave the Company, which could adversely affect the ability of the Company to continue operations. The Company is entirely dependent on the efforts of Mr. Barch, our CEO and President, because of the time and effort that he devotes to the Company. He is in charge of overseeing all development strategies, supervising any/all future personnel, including any consultants or contractors that we engage to assist in developing our new business plan and the establishment of our future sales and marketing team. The loss of him, or other key personnel in the future, could have a material adverse effect on our business, financial condition and results of operations. The Company does not maintain key person life insurance on its officers, directors or key employees. Our success will depend on the performance of Mr. Barch and our ability to attract and motivate other key personnel. Presently, the Companys president has other outside business activities and as such he is not devoting all of her time to the Company, which may result in periodic interruptions or business failure. Our sole officer and director, Mr. Barch, has other outside business activities as he is currently the sole officer and director of Georgetown Corporation. However, he is committed to devote approximately 50 hours per week to our operations. Our operations may be sporadic and occur at times when Mr. Barch is unavailable, which may lead to the periodic interruption in the implementation of our new business plan. Such delays could have a significant negative effect on the success of the business. We may suffer losses from product liability claims. We may be susceptible to product liability lawsuits from events arising out of the use of Clotamin or the distribution of any other product or products. If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product. If we are unable to protect against potential product liability claims, we may be unable to market Clotamin. A successful product liability claim brought against us may cause us to incur substantial liabilities and, as a result, our business may fail. Our commercial success relating to the sale of Coltamin will depend on our ability to develop and commercialize Clotamin, or any other products developed or acquired by us, without infringing the intellectual property rights of third parties. Our commercial success will depend, in part, on our not infringing the patents or proprietary rights of third parties. Third parties that believe we are infringing on their rights could bring actions against us claiming damages and seeking to enjoin clinical testing, distribution and marketing of the affected product or products. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If any of these actions are successful, we could be required, in addition to any potential liability for damages, to obtain a license to continue to distribute or market the affected product. However, any such license may not be available on acceptable terms or at all. Ultimately, we could be prevented from commercializing a product, or forced to cease some aspect of our business operations, as a result of patent infringement claims, which would harm our business. We may enter into licensing agreements with third party intellectual property owners for use of their property in connection with our potential products in order to ensure that such third partys rights are not infringed.
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Although we are not aware that any of our intended potential products would materially infringe the rights of others, a claim of infringement may be asserted against us and any such assertion may result in costly litigation or may require us to obtain a license in order to distribute, use, or sell our products. Third parties may assert infringement claims against us in the future with respect to current or future products. Any such claims or litigation, with or without merit, could be costly and a diversion of managements attention, which could have a material adverse effect on our business, operating results and financial condition. Adverse determinations in such claims or litigation could harm our business, operating results and financial condition. If competitors develop and market products that offer advantages as compared to our product, our commercial opportunities will be limited. Other companies may have products in development that will compete directly with Clotamin. If these competitors are able to develop products that are more effective, have fewer side effects, are less expensive or offer other advantages as compared to our product, our commercial opportunities will be limited. Furthermore, if our competitors commercialize competing products before we do, then our ability to penetrate the market and sell our products may be impaired. Our competitors also include fully integrated pharmaceutical companies and biotechnology companies, universities and public and private research institutions. Many of the organizations competing with us have substantially greater capital resources, larger research and development staffs and facilities, greater experience in drug development and in obtaining regulatory approvals, and greater manufacturing and marketing capabilities than we do. We may engage in new partnerships and other strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management. From time to time we consider strategic transactions, such as out-licensing or in-licensing of compounds or technologies, acquisitions of companies and asset purchases. Additional potential transactions we may consider include a variety of different business arrangements, including strategic partnerships, joint ventures, spin-offs, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring or other charges, may increase our near- and long-term expenditures and may pose significant integration challenges, require additional expertise or disrupt our management or business, which could harm our operations and financial results. As part of an effort to enter into significant transactions, we conduct business, legal and financial due diligence with the goal of identifying and evaluating material risks involved in the transaction. Despite our efforts, we ultimately may be unsuccessful in ascertaining or evaluating all such risks and, as a result, might not realize the intended advantages of the transaction. If we fail to realize the expected benefits from any transaction we may consummate, whether as a result of unidentified risks, integration difficulties, regulatory setbacks or other events, our business, results of operations and financial condition could be adversely affected. Collaborative relationships may lead to disputes and delays in drug development and commercialization. We may in the future have conflicts with our prospective collaborators, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement of milestones, or the ownership of intellectual property. If any conflicts arise with prospective collaborators, such collaborators may act in a manner that is adverse to our interests. Any such disagreement could result in one or more of the following, each of which could delay, or lead to termination of, development or commercialization of our partnered drug candidates, and in turn prevent us from generating revenues: unwillingness on the part of a collaborator to pay us research funding, milestone payments or royalties that we believe are due to us under a collaboration; uncertainty regarding ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into additional collaborations; unwillingness on the part of a collaborator to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure of the results of those activities; slowing or cessation of a collaborators development or commercialization efforts with respect to our drug candidates; or litigation or arbitration.
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Disruptions in our supply chain or among other companies providing services to us could adversely affect our ability to fill purchase orders, which would have a negative impact on our financial performance. The failure of a single source in the supply chain would cause only minor delays in our ability to fill purchase orders. In the event of a supply gap, we would either procure product in the market, if available at a reasonable cost, or work with other sources to formulate the drug in question. Such fixes to the supply gap would cause delay of shipment and increase costs, both of which would have negative impact on our profitability and our results of operations.
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Competition from horizontal and vertical markets involved in pharmaceutical distribution business may erode our profit. Our distribution arm faces competition, both in price and service, from national, regional, and local full-line, short-line, and specialty wholesalers, service merchandisers, self-warehousing chains, manufacturers engaged in direct distribution, and large payor organizations. In addition, competition exists from various other service providers and from pharmaceutical and other healthcare manufacturers (as well as other potential customers) which may from time to time decide to develop, for their own internal needs, supply management capabilities that would otherwise be provided by us. Price, quality of service and in some cases, convenience to the customer, are generally the principal competitive elements in this segment. We could suffer reputational and financial damage in the event of product recalls. Changes in the U.S. healthcare environment could have a material adverse impact on our results of operations. In recent years, the U.S. healthcare industry has changed significantly in an effort to reduce costs. These changes include increased use of managed care, cuts in Medicare and Medicaid reimbursement levels, consolidation of pharmaceutical and medical-surgical supply distributors, and the development of large, sophisticated purchasing groups. Some of these changes, such as adverse changes in government funding of healthcare services, legislation or regulations governing the delivery or pricing of pharmaceuticals and healthcare services or mandated benefits, may cause healthcare industry participants to reduce the amount of our products and services they purchase or the price they are willing to pay for our products and services. Changes in the healthcare industrys or our pharmaceutical suppliers pricing, selling, inventory, distribution or supply policies or practices could also significantly reduce our revenues and net income. Healthcare and public policy trends indicate that the number of generic drugs will increase over the next few years as a result of the expiration of certain drug patents. While this is expected to be a positive development for us, changes in pricing of certain generic drugs could have a material adverse impact on our revenues and our results of operations. Regulation of our distribution business could impose increased costs, delay the introduction of new products, which could negatively impact our business. The healthcare industry is highly regulated. As a result, we and our suppliers and distributor are subject to various local, state and federal laws and regulations, which include the operating and security standards of the Drug Enforcement Administration (DEA), the FDA, various state boards of pharmacy, state health departments, the HHS, CMS, and other comparable agencies. The process and costs of maintaining compliance with such operating and security standards could impose increased costs, delay the introduction of new products and negatively impact our business. For example, there have been increasing efforts by various levels of government agencies, including state boards of pharmacy and comparable government agencies, to regulate the pharmaceutical distribution system in order to prevent the introduction of counterfeit, adulterated and/or mislabeled drugs into the pharmaceutical distribution system. Certain states have adopted or are considering laws and regulations that are intended to protect the integrity of the pharmaceutical distribution system, while other government agencies are currently evaluating their recommendations. In addition, the U.S. Food and Drug Administration (FDA) Amendments Act of 2007, which went into effect on October 1, 2007, requires the FDA to establish standards and identify and validate effective technologies for the purpose of securing the pharmaceutical supply chain against counterfeit drugs. These standards may include any track-and-trace or authentication technologies, such as radio frequency identification devices and other similar technologies. These pedigree tracking laws and regulations could increase the overall regulatory burden and costs associated with our pharmaceutical distribution business, and would have a material adverse impact on our operating expenses and our results of operations. RISKS RELATING TO THE COMMON STOCK The Companys stock price may be volatile. The market price of the Companys common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond the Companys control, including the following: services by the Company or its competitors; additions or departures of key personnel; the Companys ability to execute its business plan; operating results that fall below expectations; loss of any strategic relationship;
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industry developments; economic and other external factors; and period-to-period fluctuations in the Companys financial results.
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In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Companys common stock. FINRA sales practice requirements may limit a stockholders ability to buy and sell our stock. The Financial Industry Regulatory Authority (FINRA) has adopted rules that relate to the application of the SECs penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. FINRAs requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholders ability to resell shares of our common stock. We may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. In addition to the costs of compliance with having our shares listed on the OTCBB, there are substantial penalties that could be imposed upon us if we fail to comply with all of regulatory requirements. In particular, under Section 404 of the Sarbanes-Oxley Act of 2002 we will be required, beginning with our fiscal year ending June 30, 2011, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting as of the end of fiscal 2011. Furthermore, our independent registered public accounting firm will be required to attest to whether our assessment of the effectiveness of our internal control over financial reporting is fairly stated in all material respects and separately report on whether it believes we have maintained, in all material respects, effective internal control over financial reporting. We expect to incur additional expenses and diversion of managements time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements. The Companys common stock is currently deemed to be penny stock, which makes it more difficult for investors to sell their shares . The Companys common stock is and will be subject to the penny stock rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than established customers complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for the Companys securities. If the Companys securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Companys securities. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following summarizes the factors affecting the operating results and financial condition of Sunpeaks Ventures, Inc. This discussion should be read together with the financial statements of Sunpeaks Ventures, Inc. and the notes to financial statements incorporated by reference into this current report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Risk Factors and elsewhere in this report. We encourage you to review our Cautionary Note Regarding Forward-Looking Statements and Industry Data at the front of this current report, and our Risk Factors set forth above.
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RESULTS OF OPERATIONS Working Capital December 31, 2011 $ 9,916 214,343 (204,427) June 30, 2011 $ 37,268 195,713 (158,445)
Current Assets Current Liabilities Working Capital (Deficit) Cash Flows
December 31, 2011 $ Cash Flows from (used in) Operating Activities Cash Flows from (used in) Financing Activities Net Increase (decrease) in Cash During Period Operating Revenues We have not generated any material revenues since inception. Operating Expenses and Net Loss (27,352) (27,352)
December 31, 2010 $ (18,120) 12,525 (5,595)
Operating expenses for the three months ended December 31, 2011 were $20,206 compared with $17,381 for the three months ended December 31, 2010. The increase of $2,825 was due to $2,990 increase in general and administrative expenses related to additional filing fees for XBRL filing. Operating expenses for the six months ended December 31, 2011 were $40,437 compared with $35,802 for the six months ended December 31, 2010. The increase of $4,635 was attributed to $3,150 increase in general and administrative expenses for additional fees incurred relating to XBRL filing, and $1,485 increase in professional fees for additional time and costs incurred for legal fees relating to equity issuances and filing of amendments to the Companys authorized capital and stock split. For the six months ended December 31, 2011, the Company incurred a net loss of $45,982 compared with a net loss of $37,818 for the six months ended December 31, 2010. In addition to operating expenses, the Company incurred interest expense of $5,545 compared with $2,016 for the six months ended December 31, 2010. The increase in interest expense due to a full period of interest expense as the prior year only incorporated a partial year of interest expense. At December 31, 2011 and 2010, the Company had a net loss per share of $nil. Liquidity and Capital Resources As at December 31, 2011, the Companys cash balance and total assets were $9,916 compared to $37,268 as at June 30, 2011. The decrease in total assets is attributed to the fact that the Company incurred operating expenses that exceeded the amount of new debt financing received during the year. As at December 31, 2011, the Company had total liabilities of $214,343 compared with total liabilities of $195,713 as at June 30, 2011. The increase in total liabilities of $18,630 is attributed to increases in accounts payable and accrued liabilities of $8,630 due to outstanding professional fees, and $10,000 of amounts owing to related parties that were received during the period. As at December 31, 2011, the Company has a working capital deficit of $204,427 compared with $158,445 at June 30, 2011 and the increase in the working capital deficit is attributed to the use of existing cash to settle obligations.
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Cashflow from Operating Activities During the six months ended December 31, 2011, the Company used $27,352 of cash for operating activities compared to the use of $18,120 of cash for operating activities during the six months ended December 31, 2010. The increase in cash used for operating activities is due to the fact that the Company did not raise any new financing during the year and repaid outstanding obligations using existing cash balances from the beginning of the year. Cashflow from Financing Activities During the six months ended December 31, 2011, the Company received proceeds of $nil from financing activities compared to $12,525 during the six months ended December 31, 2010. The decrease in proceeds from financing activities was due to the fact that the Company received $10,000 in proceeds from a related party and $3,525 from issuance of a note payable, and repaid $1,000 of outstanding notes payable in the prior period compared to the current period Going Concern We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. Future Financings We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders. Critical Accounting Policies Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. Recently Issued Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. ITEM 3. PROPERTIES Our offices are currently located at 9337 Fraser Ave, Silver Spring, MD 20910 and the telephone number is (204) 898-8160. We currently share office space with our wholly-owned subsidiary, HDS. On March 9, 2011, HDS entered into a lease agreement whereby HDS agreed to pay $1,775 per month for a one-year term. The office space is approximately 2000 square feet of industrial/office space. The space is utilized for general office purposes and it is our belief that the space we currently occupy is adequate for our immediate needs. Additional space may be required as we expand our operations. We do not foresee any significant difficulties in obtaining any required additional space. We currently do not own any real property.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information concerning the number of shares of our stock owned beneficially as of February 16, 2012, by: (i) our directors; (ii) our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own. Amount and Nature of Beneficial Ownership(1) (#) 200,000,000 3,000,000 500,000,000(4) 200,000,000 3,000,000 500,000,000(4) 50,000,000 0 50,000,000 250,000,000 3,000,000 550,000,000(4)
Name and Address of Beneficial Owner Mackie Barch (3) 9337 Fraser Ave Silver Spring, MD 20910 Total Voting Rights of All Classes All Officers and Directors as a Group (1 Person) Total Voting Rights of All Classes Whetu Inc. (5) PO Box 832-0816 World Trade Centre Panama City, Republic of Panama Total Voting Rights of All Classes Total of All Beneficial Owners
Title of Class Common Class A Preferred Common Class A Preferred (4)
Percent of Classes (2) (%) 47.56% 100% 69.40%(3) 47.56% 100% 69.40%(3) 11.89% 0% 6.93% 59.45% 100% 76.34%
Common Class A Preferred (4) Common Class A Preferred (4)
Total Voting Rights of All Classes (1)
The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. (2) Based on 420,500,750 issued and outstanding shares of common stock; and 3,000,000 issued and outstanding Class A Preferred Shares as of February 16, 2012. (3) Mackie Barch is the Companys sole officer and director. His beneficial ownership includes 200,000,000 common shares, and 3,000,000 Class A Preferred Shares and he acquired these shares pursuant to the Share Exchange Agreement entered into on February 13, 2012. (4) Class A Preferred Shares have 100:1 voting rights and 5:1 conversion rights to common stock. (5) Evelyn Quintero has voting power over the shares held by Whetu, Inc.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS Identification of Directors and Executive Officers The following table sets forth the names and ages of our current directors and executive officers: Name Mackie Barch Age 37 Position with the Company CEO, CFO, President, Treasurer, Secretary, & Director Director Since February 13, 2012
The board of directors has no nominating, audit or compensation committee at this time. Term of Office Each of our directors is appointed to hold office until the next annual meeting of our shareholders or until his respective successor is elected and qualified, or until she resigns or is removed in accordance with the provisions of the Nevada Revised Statues. Our officers are appointed by our Board of Directors and hold office until removed by the Board or until their resignation. Background and Business Experience The business experience during the past five years of the person presently listed above as an Officer or Director of the Company is as follows: Mackie A. Barch - Sole Officer and Director Mackie Barch (Mr. Barch) is the co-founder of Global Nutritional Research LLC (GNR), since its inception in July 2007 until present. Prior to joining HDS, from late 2006 to 2007, Mr. Barch was involved in numerous financial and operational aspects of the Global Pharmaceutical Sourcing (GPS). Prior to working for GPS, Mr. Barch was employed as Assistant Vice President in institutional equities at Friedman, Billings, & Ramsey (FBR), an investment bank and broker dealer, from 2001 to 2006. During his career, Mr. Barch has participated in numerous equity offerings including 144a, IPO and Secondary Offerings. Mr. Barch graduated the University of Colorado-Boulder with a BA in Economics. Mr. Barch is currently an elected official in the State of Maryland, serving as a City Council Member in Kensington, MD, and has been since his election in 2009. The Company determined that Mr. Barchs background with HDS and in the pharmaceutical and finance industries made him the ideal candidate for appointment to the board of directors and as an officer of the Company. Mr. Barch is also the sole officer and director of Georgetown Corporation (fka Yukonic Minerals Corp.), a public company currently quoted on the OTC Market under the symbol YKMN.OB. Mr. Barch took over control of Georgetown Corporation on November 30, 2011. Identification of Significant Employees The Company currently has no employees, other than our sole officer and director, Mr. Barch. Our wholly-owned subsidiary, HDS, currently has 9 employees, including Mr. Barch. However, we intend to seek out and identify qualified persons to assist the Company in implementing its new business plan and operations. Family Relationship We currently do not have any officers or directors of our Company who are related to each other. Directors Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors. Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present time, members of the board of directors are not compensated for their services to the board.
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Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Audit Committee The Company intends to establish an audit committee of the board of directors, which will consist of soon-to-be-nominated independent directors. The audit committees duties would be to recommend to the Companys board of directors the engagement of an independent registered public accounting firm to audit the Companys financial statements and to review the Companys accounting and auditing principles. The audit committee would review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee would at all times be composed exclusively of directors who are, in the opinion of the Companys board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles. Compensation Committee The Company intends to establish a compensation committee of the Board of Directors. The compensation committee would review and approve the Companys salary and benefits policies, including compensation of executive officers. Security Holders Recommendations to Board of Directors We do not currently have a process for security holders to send communications to the Board of Directors. However, we welcome comments and questions from our shareholders. Shareholders can direct communications to our Chief Executive Officer, Mr. Barch, at our executive offices. While we appreciate all comments from shareholders, we may not be able to individually respond to all communications. We attempt to address shareholder questions and concerns in our press releases and documents filed with the SEC so that all shareholders have access to information about us at the same time. Mr. Barch collects and evaluates all shareholder communications. If the communication is directed to the Board of Directors generally or to a specific director, Mr. Barch will disseminate the communications to the appropriate party at the next scheduled Board of Directors meeting. If the communication requires a more urgent response, Mr. Barch will direct that communication to the appropriate executive officer. All communications addressed to our directors and executive officers will be reviewed by those parties unless the communication is clearly frivolous. ITEM 6. EXECUTIVE COMPENSATION Compensation Discussion and Analysis At the present time, members of the board of directors are not compensated for their services to the board.
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Summary Compensation Table The following table sets forth the compensation paid to our executive officers during the years ended June 30, 2011 and 2010: Summary Compensation Table Non-Equity Incentive Plan Stock Option Compensatio Awards Awards n ($) ($) ($) (e) (f) (g) -0-0-0-
Name and Principal Position (a)
Title
Yea r (b)
Salary ($) (c) 20,00 0 20,00 0
Bonus ($) (d) -0-
Nonqualified Deferred Compensatio n Earnings ($) (h) -0-
All other compensatio n ($) (i) -0-
Total ($) (j) 20,00 0 20,00 0
Former 2010 Scott Chairman, Beaudette(1 CEO and ) President 2011 Current Chairman, 2011 CEO and President
-0-
-0-
-0-
-0-
-0-
-0-
Mackie Barch(2)
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Notes to Summary Compensation Table: (1) Pursuant to Mr. Beaudettes Management Agreement, he was to receive compensation of $5,000 per financial quarter. On February 13, 2012 Mr. Beaudette resigned as officer and director of the Company. (2) On February 13, 2012, Mr. Mackie Barch was appointed as the Companys President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director. As compensation for such services, Mr. Barch shall receive a monthly fee of $1,000 per calendar month. Such fee shall be payable on the first day of each calendar month. There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Company or any of its subsidiaries, if any. ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The Companys wholly-owned subsidiary, HDS, has an arrangement with a specialty pharmacy, owned by the Companys sole officer and director, Mr. Barch. Pursuant to the arrangement the specialty pharmacy will purchase directly from manufacturers and then resell the pharmaceutical products to HDS. None of the following persons has any direct or indirect material interest in any transaction to which we were or are a party since the beginning of our last fiscal year, or in any proposed transaction to which we propose to be a party: (A) any of our directors or executive officers; (B) any nominee for election as one of our directors; (C) any person who is known by us to beneficially own, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or (D) any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons named in paragraph (A), (B) or (C) above
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We anticipate reviewing all related party transactions as they are presented to us, and we would not anticipate that such review procedures would be in writing until such time as our Board of Directors felt it was necessary.
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Director Independence For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of common stock are quoted does not have any director independence requirements. The NASDAQ definition of Independent Officer means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. According to the NASDAQ definition, we do not have any independent directors because Mackie Barch is our only director and he is also an executive officer of the Company. ITEM 8. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is currently quoted on the OTC Bulletin Board. Our common stock has been quoted on the OTC Bulletin Board since October 26, 2011 under the symbol SNPK.OB. Because we are quoted on the OTC Bulletin Board, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange. As of February 16, 2012, the Company has not begun trading on the OTCBB. Reports to Security Holders We are a reporting company pursuant to the Securities and Exchange Act of 1934. As such, we provide an annual report to our security holders, which will include audited financial statements, and quarterly reports, which will contain unaudited financial statements. Record Holders As of February 16, 2012, an aggregate of 420,500,750 shares of our common stock were issued and outstanding and were owned by approximately 8 holders of record, based on information provided by our transfer agent. Re-Purchase of Equity Securities None. Dividends On December 7, 2011, the Company effectuated a forward split (the Forward Split) of its issued and outstanding common shares whereby every one (1) old share of common stock was exchanged for forty-five (45) new shares of the Company's common stock. As a result, the issued and outstanding shares of common stock of the Company increased from eight million two hundred thirty three thousand three hundred and fifty (8,233,350) shares prior to the Forward Split to three hundred seventy million five hundred thousand seven hundred and fifty (370,500,750) shares following the Forward Split. The Forward Split was payable as a dividend to shareholders of record upon surrender. We have not paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future. Securities Authorized for Issuance Under Equity Compensation Plans
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The Company has not authorized any securities for issuance under an Equity Compensation Plan.
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Trading Information The Companys common stock is currently approved for quotation under the symbol SNPK.OB but there is currently no liquid trading market for the Companys common stock. The information for our transfer agent is as follows: Action Stock Transfer Company 2469 E. Fort Union Blvd, Ste 214 Salt Lake City, UT 84121 Tel: (801) 274-1088 Section 15(g) of the Securities Exchange Act of 1934 Our companys shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchasers written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market. Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the NASDs toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares. Securities authorized for issuance under equity compensation plans None. ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES Other than those previously reported, none. ITEM 11. DESCRIPTION OF THE REGISTRANTS SECURITIES Common Stock Our authorized capital stock consists of 550,000,000 Shares of Common Stock, $0.001 par value per Share. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control. However, there exists such provisions in our charter that may make a change of control more difficult. The holders of our Common Stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for distribution to holders of Common Stock upon liquidation, dissolution or winding up of our affairs. Our Common Stock does not provide the right to preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our Common Stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote. Holders of shares of our Common Stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the state of Nevada for a more complete description of the rights and liabilities of holders of our securities
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Preferred Stock The Companys Articles of Incorporation authorize the issuance of 50,000,000 shares of Preferred Stock with designations, rights and preferences determined from time to time by our Board of Directors. The following is a summary of the material rights and restrictions associated with our Preferred Stock. This description does not purport to be a complete description of all of the rights of our stockholders and is subject to, and qualified in its entirety by, the provisions of our most current Articles of Incorporation and Bylaws, which are included as exhibits to this Registration Statement. Our Board of Directors is authorized to determine or alter any or all of the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series, to set the designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation preferences of the shares of any such series. Class A Preferred Stock On November 3, 2011 the Company designated twenty five million (25,000,000) shares of its Preferred Stock as Class A Preferred Stock. For a further description of the rights, preferences, privileges and restrictions imposed on the Class A Preferred Stock please refer to the Companys Amended and Restated Articles of Incorporation, which are incorporated into this Report by this reference. Warrants & Options There are no outstanding warrants or options to purchase our securities. ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 78.7502 of the Nevada Revised Statutes provides, in part, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or other enterprise, against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Similar indemnity is authorized for such persons against expenses (including attorneys fees) actually and reasonably incurred in defense or settlement of any threatened, pending or completed action or suit by or in the right of the corporation, if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and provided further that (unless a court of competent jurisdiction otherwise provides) such person shall not have been adjudged liable to the corporation. Any such indemnification may be made only as authorized in each specific case upon a determination by the stockholders or disinterested directors that indemnification is proper because the indemnitee has met the applicable standard of conduct. Where an officer or a director is successful on the merits or otherwise in the defense of any action referred to above, we must indemnify him or her against the expenses which such offer or director actually or reasonably incurred. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Directors' and Officers' Liability Insurance We currently do not have directors' and officers' liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers, subject to certain exclusions.
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ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information provided below in Item 9.01 of this Report on Form 8-K is incorporated by reference into this Item 13. ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements on accounting and financial disclosures from the inception of our company through the date of this Report. ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS The information provided below in Item 9.01 of this Report on Form 8-K is incorporated by reference into this Item 15. Item 2.01(f) of Form 8-K states that if the registrant was a shell company like we were immediately before the transaction disclosed under Item 2.01, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. The foregoing Items enumerated 1 through 14 are intended to satisfy and relate such information required by Item 2.01(f) for Form 8-K. The following enumerated Items relate to this current report on Form 8-K. END OF FORM 10 DISCLOSURE ________________________________________________________________________________________________
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________________________________________________________________________________________________ ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION The information provided in Item 1.01 of this Current Report on Form 8-K related to the aforementioned Management Agreement is incorporated by reference into this Item 2.03. ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES The information provided in Item 1.01 of this Current Report on Form 8-K related to the aforementioned Share Exchange Agreement and the Whetu Settlement Agreement is incorporated by reference into this Item 3.02. Exemption From Registration. The shares of stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, (Securities Act), and/or Regulation D, as promulgated by the U.S. Securities and Exchange Commission under the Securities Act, based upon the following: (a) each of the persons to whom the shares of stock were issued (each such person, an Investor) confirmed to the Company that it or he is an accredited investor, as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were restricted securities for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act. ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT The information provided in Items 1.01, related to the aforementioned Share Exchange Agreement, and 3.02 of this Report are incorporated by reference into this Item 5.01. Pursuant to the Share Exchange Agreement, we issued: (i) two hundred million (200,000,000) newly-issued restricted shares of the Companys common stock and (ii) three million (3,000,000) newly-issued restricted shares of the Companys Class A Preferred Stock, resulting in Mr. Barch holding 47.56% of the Companys common stock, and 100% of the Companys Preferred Stock. Due to the 100:1 voting rights of the Class A Preferred Stock, Mr. Barch holds 69.40% of the voting rights of all issued and outstanding stock of the Company. The Share Exchange Agreement is being accounted for as a "reverse acquisition," as the HDS Managing Member owns a majority of the outstanding shares of the Company's capital stock immediately following the closing of the Share Exchange Agreement. The Board of Directors and management, after the Share Exchange Agreement, are comprised of HDSs management team. Furthermore, the operations of HDS are the continuing operations of the Company, therefore, HDS is deemed to be the acquirer in the reverse acquisition. ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS In connection with the closing of the Share Exchange Agreement, Mr. Beaudette has resigned from all positions with Company, including but not limited to President, CEO, CFO, Treasurer, Secretary and Director and concurrently therewith Mr. Barch has been appointed the President, CEO, CFO, Secretary, Treasurer and a Director of the Company. The biography for Mr. Barch is set forth herein. ITEM 5.06 CHANGE IN SHELL COMPANY STATUS As a result of closing the Share Exchange Agreement, management has determined that the Company is no longer a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. Therefore, the Company is filing this report to disclose such information as would be required if the Company were filing a general form for registration of securities on Form 10.
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ITEM 8.01 OTHER ITEMS The new address for the Company is 9337 Fraser Ave, Silver Spring, MD 20910 and the new phone number is (204) 898-8160.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired. The audited consolidated financial statements of HDS as of December 31, 2010, and for the period from September 19, 2008 (date of inception) to December 31, 2010 are filed hereto as Exhibit 99.01 and are incorporated herein by this reference. The unaudited consolidated financial statements of the HDS for the nine months ended September 30, 2011 are filed as Exhibit 99.02 hereto and are incorporated herein by this reference. (c) Shell Company Transactions. The audited financial statements of the Company for the years ended June 30, 2011, and 2010 were filed with the SEC on October 12, 2011 as part of our Annual Report on Form 10-K and are incorporated herein by this reference. The unaudited financial statements of the Company for the period ended December 31, 2011 were filed with the SEC on February 13, 2012 as part of our Quarterly Report on Form 10-Q and are incorporated herein by this reference. (d) Exhibits. Exhibit Number 3.01 3.01(a) 3.02 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 21.01 99.01 99.02
Description of Exhibit Articles of Incorporation Amended and Restated Articles of Incorporation Bylaws Form of Subscription Agreement Form of Convertible Promissory Note between the Company and Blue Lagoon Capital dated June 25, 2009 Management Agreement between the Company and Scott Beaudette dated June 25, 2009 Lease Agreement between the Company and Nitro Petroleum, Inc. dated November 21, 2008 Settlement Agreement between the Company and Blue Lagoon Capital dated May 5, 2011 Settlement Agreement between the Company and Habana Investments dated May 5, 2011 Promissory Note between the Company and Whetu, Inc. dated July 13, 2011 Settlement Agreement between the Company and Scott Beaudette dated February 13, 2012 Settlement Agreement between the Company and Carrillo Huettel, LLP dated February 13, 2012. Share Exchange Agreement between the Company and HDS Settlement Agreement between the Company and Whetu, Inc. dated February 13, 2012. Management Agreement between the Company and Mackie Barch Lease Agreement List of Subsidiaries Audited Consolidated Financial Statements of HDS as of December 31, 2010 Unaudited Consolidated Financial Statements of HDS as of September 30, 2011
Filing Filed with the SEC on September 18, 2009 as part of our Registration Statement on Form S-1. Filed with the SEC on November 4, 2011 as part of our Current Report on form 8-K. Filed with the SEC on September 18, 2009 as part of our Registration Statement on Form S-1. Filed with the SEC on September 18, 2009 as part of our Registration Statement on Form S-1. Filed with the SEC on September 18, 2009 as part of our Registration Statement on Form S-1. Filed with the SEC on December 30, 2009 as part of our Amended Registration Statement on Form S-1/A. Filed with the SEC on May 5, 2010 as part of our Amended Registration Statement on Form S-1/A. Filed with the SEC on May 16, 2011 as part of our Quarterly Report on Form 10-Q. Filed with the SEC on May 16, 2011 as part of our Quarterly Report on Form 10-Q. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith.
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99.03 99.04
Unaudited Financial Statements of Sunpeaks Ventures, Inc. as of June 30, 2011 Unaudited Financial Statements of Sunpeaks Ventures, Inc. as of December 31, 2011
Filed with the SEC on October 12, 2011 as part of our Annual Report on Form 10-K. Filed with the SEC on February 13, 2012 as part of our Quarterly Report on Form 10-Q.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 17, 2012 SUNPEAKS VENTURES, INC. By: /s/ Mackie Barch Mackie Barch President and Chief Executive Officer
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Exhibit 10.7 UNSECURED PROMISSORY NOTE
PRINCIPAL AMOUNT: $110,000 LOAN DATE: May 6, 2011 EXECUTION DATE: July 13, 2011 INTEREST RATE: 10.00% SIMPLE INTEREST BORROWER: SUNPEAKS VENTURES, INC. LENDER: WHETU, INC. PAYMENT: $110,000 DUE ON DEMAND 1. Principal Repayment. For value received, Sunpeaks Ventures, Inc., a Nevada corporation (the Borrower) hereby unconditionally promises to pay to the order of Whetu, Inc. (the Lender), the principal amount of One Hundred Ten Thousand Dollars ($110,000), with simple interest accruing at a annual rate of 10.00% thereon. The principal amount is due and payable on demand upon 10 days written notice by Lender (the Due Date). 2. Payment Terms. Borrower shall pay the principal and any accrued interest in full on or before Due Date. 3. Default. Borrower will be in default if any of the following occur: (a) Borrower fails to make the Principal Repayment when due; (b) Borrower breaks any promise Borrower has made to Lender in this Note or Borrower fails to perform promptly at the time and strictly in the manner provided in this Note; (c) Any representation or statement made or furnished to Lender by Borrower or on Borrower's behalf in connection with this Note is false or misleading in any material respect; or, (d) A receiver is appointed for any part of Borrower's property, Borrower makes an assignment for the benefit of creditors, or any proceeding is commenced either by Borrower or against Borrower under any Bankruptcy or insolvency laws seeking the liquidation or reorganization of Borrower and such proceeding is not dismissed within 60 days after such filing. 4. Borrowers Right to Prepay. Borrower may pay without penalty, all or a portion of the amount owed earlier that it is due. Any prepayment shall be first applied against any accrued and unpaid interest and then to reduce the amount of principal due under this Note.
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5. Waiver of Demand, Presentment, etc. The Borrower hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. 6. Payment. Except as otherwise provided for herein, all payments with respect to this Note shall be made in lawful currency of the United States of America by check or wire transfer of immediately available funds, at the option of the Lender, at the principal office of the Lender or such other place or places or designated accounts as may be reasonably specified by the Lender of this Note in a written notice to the Borrower at least one (1) business day prior to payment. 7. Assignment. The rights and obligations of the Borrower and the Lender of this Note shall be binding upon, and inure to the benefit of, the permitted successors, assigns, heirs, administrators and transferees of the parties hereto.
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8. Waiver and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Borrower and the Lender 9. Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or delivered by facsimile transmission, to the Borrower at the address or facsimile number set forth herein or to the Lender at its address or facsimile number set forth in the records of the Borrower. Any party hereto may by notice so given change its address for future notice hereunder. Notice shall conclusively be deemed to have been given when personally delivered or when deposited in the mail in the manner set forth above and shall be deemed to have been received when delivered or, if notice is given by facsimile transmission, when delivered with confirmation of receipt. 10. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms. 11. Headings. Section headings in this Note are for convenience only, and shall not be used in the construction of this Note. IN WITNESS WHEREOF, the Borrower has caused this Note to be issued as of the date first above written. SUNPEAKS VENTURES, INC.
By: /s/ Scott Beaudette Name: Scott Beaudette Title: CEO
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Exhibit 10.8 SETTLEMENT AGREEMENT AND GENERAL MUTUAL RELEASE This Settlement Agreement and General Mutual Release (the Agreement) is made and entered into as of February 13, 2012, by and between, on the one hand, Sunpeaks Ventures, Inc., a Nevada corporation (Sunpeaks) and, on the other hand, Scott Beaudette (Holder). Sunpeaks and Holder are sometimes referred to herein as Party or Parties. RECITALS A. Whereas, Holder has lent Sunpeaks funds in the aggregate amount of fifty thousand ($50,000), including any and all accrued and unpaid interest (the Debt); B. Whereas, on February 13, 2012, Sunpeaks paid five thousand dollars ($5,000) to Holder in full satisfaction of the Debt; C. Whereas, as a result of negotiations between Sunpeaks and Holder, the Parties have proposed a resolution that they deem to be fair and equitable, and by this Agreement, Holder and Sunpeaks wish to compromise, resolve, waive and release any and all claims, known or unknown, by and between them as fully set forth herein which exist or may exist today. D. Whereas, each party, without admitting any liability whatsoever, enters into this Agreement to settle all disputes, claims and actions between the Parties, as well as to settle any and all events or relationships between the Parties. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties covenant and agree as follows: A. Recitals. The foregoing recitals are true and correct and incorporated by reference herein. B. Consideration. As full consideration for this Agreement hereunder, and as full and final satisfaction for the Debt, on February 13, 2012 Holder received five thousand dollars ($5,000) (the Payment) from Sunpeaks, and Holder agreed to settle the Debt in exchange for the Payment. C. Mutual Release. Holder, on the one hand, and Sunpeaks, on the other hand, for themselves and their respective predecessors, successors, affiliates, officers, directors, principals, partners, employees, executors, beneficiaries, representatives, agents, assigns, attorneys, and all others claiming by or through them hereby release and forever discharge each other and their respective predecessors, successors, affiliated entities, subsidiaries, parent companies, affiliates, officers, directors, principals, partners, employees, executors, beneficiaries, representatives, agents, assigns, and attorneys from any and all actions, causes of action, suits, proceedings, debts, contracts, controversies, agreements, promises, damages, claims and demands of any kind, nature or description, known or unknown, of any kind whatsoever, whether based upon a tort, contract or other theory of recovery, and whether for compensatory damages, punitive damages or other relief in law, equity or otherwise, that any of the Parties has ever had, now has, or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this Agreement, including without limitation all claims arising out of or relating to the Debt. D. Entire Agreement; No Oral Modification. This Agreement constitutes the complete and entire written agreement of compromise, settlement and release between the Parties and constitutes the complete expression of the terms of the settlement. All prior and contemporaneous agreements, representations, and negotiations are superseded and merged herein. The terms of this Agreement can only be amended or modified by a writing, signed by duly authorized representatives of all Parties hereto, expressly stating that such modification or amendment is intended.
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E. Authority to Execute. Each Party executing this Agreement represents that it is authorized to execute this Agreement. Each person executing this Agreement on behalf of an entity, other than an individual executing this Agreement on his or her own behalf, represents that he or she is authorized to execute this Agreement on behalf of said entity. F. Voluntary Agreement. The Parties have read this Agreement, have had the benefit of counsel and freely and voluntarily enter into this Agreement. G. Counterparts. This Agreement may be executed in counterparts and, if so executed, each counterpart shall have the full force and effect of an original. Further, a telecopied signature page by any signatory shall constitute an original for all purposes.
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H. Governing Law. This Agreement is being executed and delivered, and is intended to be performed, in the State of Nevada, and to the extent permitted by law, the execution, validity, construction, and performance of this Agreement shall be construed and enforced in accordance with the laws of the State of Nevada without giving effect to conflict of law principles. This Agreement shall be deemed made and entered into in Carson City, State of Nevada, United States of America; however, it is intended to resolve all claims, known or unknown, between Sunpeaks and Holder in any jurisdiction. IN WITNESS WHEREOF, the Parties have entered into this Agreement made and effective as of the date first hereinabove written.
Dated: February 13, 2012 Sunpeaks Ventures, Inc.
By: /s/ Scott Beaudette Name: Scott Beaudette Title: Chief Executive Officer
Dated: February 13, 2012 Scott Beaudette
By:/s/ Scott Beaudette Name: Scott Beaudette
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Exhibit 10.9 SETTLEMENT AGREEMENT AND GENERAL MUTUAL RELEASE This Settlement Agreement and General Mutual Release (the Agreement) is made and entered into as of February 13, 2012, by and between, on the one hand, Sunpeaks Ventures, Inc., a Nevada corporation (Sunpeaks) and, on the other hand, Carrillo Huettel, LLP (Attorney). Sunpeaks and Attorney are sometimes referred to herein as Party or Parties. RECITALS A. Whereas, as a result of services rendered by Attorney to Sunpeaks, Sunpeaks has an outstanding balance of forty seven thousand twenty five dollars ($47,025) due to Attorney (the Debt); B. Whereas, on February 13, 2012, Sunpeaks paid four thousand dollars ($4,000) to Attorney in full satisfaction of the Debt; C. Whereas, Attorney is not receiving any additional consideration from Sunpeaks for purposes of the transactions contemplated hereby, and Attorney is not paying any additional to Sunpeaks for any of the transactions contemplated hereby; and, D. Whereas, as a result of negotiations between Sunpeaks and Attorney, the Parties have proposed a resolution that they deem to be fair and equitable, and by this Agreement, Attorney and Sunpeaks wish to compromise, resolve, waive and release any and all claims, known or unknown, by and between them as fully set forth herein which exist or may exist today. E. Whereas, each party, without admitting any liability whatsoever, enters into this Agreement to settle all disputes, claims and actions between the Parties, as well as to settle any and all events or relationships between the Parties. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties covenant and agree as follows: A. Recitals. The foregoing recitals are true and correct and incorporated by reference herein. B. Consideration. As full consideration for this Agreement hereunder, and as full and final satisfaction for the Debt, on February 13, 2012 Attorney received four thousand dollars ($4,000) (the Payment) from Sunpeaks, and Attorney agreed to settle the Debt in exchange for the Payment. C. Mutual Release. Attorney, on the one hand, and Sunpeaks, on the other hand, for themselves and their respective predecessors, successors, affiliates, officers, directors, principals, partners, employees, executors, beneficiaries, representatives, agents, assigns, attorneys, and all others claiming by or through them hereby release and forever discharge each other and their respective predecessors, successors, affiliated entities, subsidiaries, parent companies, affiliates, officers, directors, principals, partners, employees, executors, beneficiaries, representatives, agents, assigns, and attorneys from any and all actions, causes of action, suits, proceedings, debts, contracts, controversies, agreements, promises, damages, claims and demands of any kind, nature or description, known or unknown, of any kind whatsoever, whether based upon a tort, contract or other theory of recovery, and whether for compensatory damages, punitive damages or other relief in law, equity or otherwise, that any of the Parties has ever had, now has, or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this Agreement, including without limitation all claims arising out of or relating to the Debt.
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D. Release of Unknown Claims Arising from Actions. The Parties acknowledge that they are familiar with Section 1542 of the California Civil Code, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. The Parties expressly waive and relinquish any and all rights and benefits which they may have under, or which may be conferred upon them by the provisions of Section 1542 of the California Civil Code, as well as under any other similar state or federal statute or common law principle, with respect to all claims alleged, or that could have been alleged, including without limitation any and all claims relating to or arising out of the transactions contemplated hereby. The Parties acknowledge that such waiver shall not prevent the Parties from seeking damages against the other Parties resulting from a breach of this Agreement.
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E. Entire Agreement; No Oral Modification. This Agreement constitutes the complete and entire written agreement of compromise, settlement and release between the Parties and constitutes the complete expression of the terms of the settlement. All prior and contemporaneous agreements, representations, and negotiations are superseded and merged herein. The terms of this Agreement can only be amended or modified by a writing, signed by duly authorized representatives of all Parties hereto, expressly stating that such modification or amendment is intended. F. Authority to Execute. Each Party executing this Agreement represents that it is authorized to execute this Agreement. Each person executing this Agreement on behalf of an entity, other than an individual executing this Agreement on his or her own behalf, represents that he or she is authorized to execute this Agreement on behalf of said entity. G. Voluntary Agreement. The Parties have read this Agreement, have had the benefit of counsel and freely and voluntarily enter into this Agreement. H. Counterparts. This Agreement may be executed in counterparts and, if so executed, each counterpart shall have the full force and effect of an original. Further, a telecopied signature page by any signatory shall constitute an original for all purposes. I. Governing Law. This Agreement is being executed and delivered, and is intended to be performed, in the State of California, and to the extent permitted by law, the execution, validity, construction, and performance of this Agreement shall be construed and enforced in accordance with the laws of the State of California without giving effect to conflict of law principles. This Agreement shall be deemed made and entered into in San Diego, State of California, United States of America; however, it is intended to resolve all claims, known or unknown, between Sunpeaks and Attorney in any jurisdiction. IN WITNESS WHEREOF, the Parties have entered into this Agreement made and effective as of the date first hereinabove written. Dated: February 13, 2012 Sunpeaks Ventures, Inc.
By: /s/ Scott Beaudette Name: Scott Beaudette Title: Chief Executive Officer
Dated: February 13, 2012 Carrillo Huettel, LLP
By: /s/ Luis Carrillo III Name: Luis Carrillo III Its: Partner
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Exhibit 10.10 SHARE EXCHANGE AGREEMENT This Share Exchange Agreement, dated as of February 13, 2012 (this Agreement) by and among Healthcare Distribution Specialists LLC, a Delaware limited liability company (HDS), Mackie Barch, the sole managing member of HDS (the HDS Managing Member), Sunpeaks Ventures, Inc., a Nevada corporation (SNPK), and Scott Beaudette, the majority stockholder of SNPK (the SNPK Controlling Stockholder). WHEREAS, SNPK has evaluated its current and prospective business operations and has determined that in order to create value for its shareholders it is necessary to explore alternative business opportunities. Accordingly, SNPK began discussions with HDS relating to its operations and opportunities; and, WHEREAS, HDS is a party to that certain Amended and Restated Asset Acquisition Agreement (the Acquisition Agreement), entered into on August 1, 2011, by and between HDS (fka AmeriSure Pharmaceuticals, LLC) and Global Nutritional Research, LLC, a Maryland limited liability company (GNR), pursuant to which HDS acquired 100% of the rights, title and interest to the assets held or otherwise owned or controlled by GNR related to that certain product known as Clotamin, a proprietary multivitamin (collectively the Acquired Assets); and, WHEREAS, the HDS Managing Member owns 100% of the Membership Interests (the Membership Interests) of HDS, pursuant to the terms and conditions of that certain Operating Agreement of Healthcare Distribution Specialists, LLC, as amended (the Operating Agreement); and, WHEREAS, (i) the HDS Managing Member and HDS believe it is in the best interests of HDS to exchange 100% of the Membership Interests of HDS for (a) two hundred million (200,000,000) newly-issued shares of common stock, $0.001 par value per share, of SNPK (the SNPK Common Stock), as set forth on Schedule I hereto, which, at the time of issuance will represent approximately 32.23% of the issued and outstanding shares of SNPK Common Stock, (b) three million (3,000,000) newly-issued shares of Class A Preferred Stock, $0.001 par value per share, of SNPK (the SNPK Preferred Stock) (collectively the SNPK Common Stock and the SNPK Preferred Stock shall be referred to as the SNPK Shares) and (ii) SNPK believes it is in its best interest and the best interest of its stockholders to acquire the HDS Membership Interests in exchange for the SNPK Shares, all upon the terms and subject to the conditions set forth in this Agreement (the Share Exchange); and WHEREAS, it is the intention of the parties that this Share Exchange shall qualify as a tax-free reorganization under Section 354 of the Internal Revenue Code of 1986, as amended (the Code). Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the parties acknowledge and agree that no party is making any representation or warranty as to the qualification of the Share Exchange as a reorganization under Section 354 of the Code or as to the effect, if any, that any transaction consummated prior to the Closing Date has or may have on any such reorganization status. The parties acknowledge and agree that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transaction contemplated by this Agreement, and (ii) is responsible for paying its own Taxes, including without limitation, any adverse Tax consequences that may result if the transaction contemplated by this Agreement is not determined to qualify as a reorganization under Section 354 of the Code; and, WHEREAS, the Share Exchange shall qualify as a transaction in securities exempt from registration or qualification under section 4(2) of the Securities Act of 1933, as amended and in effect on the date of this Agreement (the Securities Act); and, NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto agree as follows: ARTICLE I EXCHANGE OF HDS MEMBERSHIP INTERESTS FOR SNPK SHARES Section 1.1 Agreement to Exchange HDS Membership Interests for SNPK Shares. On the Closing Date (as hereinafter defined) and upon the terms and subject to the conditions set forth in this Agreement, the HDS Managing Member shall assign, transfer, convey, and deliver the HDS Membership Interests to SNPK. In consideration and exchange for the HDS Membership Interests, SNPK shall issue, and deliver the SNPK Shares to the HDS Managing Member. Section 1.2 Closing and Actions at Closing. The closing of the Share Exchange (the Closing) shall take place remotely via the exchange of documents and signatures on the day the conditions to closing set forth in Articles V and VI herein have been satisfied or waived, or at such other time and date as the parties hereto shall agree in writing (the Closing Date ).
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Section 1.3 Directors of SNPK at Closing Date. On the Closing Date, Scott Beaudette, the current director of SNPK, shall resign from the board of directors of SNPK (the SNPK Board) and Mackie Barchs appointment to the SNPK Board shall become effective. Section 1.4 Officers of SNPK at Closing Date. On the Closing Date, Scott Beaudette shall resign from each officer position held at SNPK and immediately thereafter, the SNPK Board shall appoint Mackie Barch to serve as the sole officer of SNPK. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SNPK SNPK represents, warrants and agrees that all of the statements in the following subsections of this Article II are true and complete as of the date hereof. Section 2.1 Corporate Organization A. SNPK is a corporation duly organized, validly existing and in good standing under the laws of Nevada, and has all requisite corporate power and authority to own its assets and governmental licenses, authorizations, consents and approvals to conduct its business as now conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its activities makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing will not have a Material Adverse Effect on the activities, business, operations, properties, assets, condition or results of operation of SNPK. Material Adverse Effect means, when used with respect to SNPK, any event, occurrence, fact, condition, change or effect, which, individually or in the aggregate, would reasonably be expected to be materially adverse to the business, operations, properties, assets, condition (financial or otherwise), or operating results of SNPK, or materially impair the ability of SNPK to perform its obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, or (ii) changes in the United States securities markets generally. B. Copies of the Articles of Incorporation and By-laws of SNPK with all amendments thereto, as of the date hereof (the SNPK Charter Documents), have been furnished to the HDS Managing Member and to HDS, and such copies are accurate and complete as of the date hereof. The minute books of SNPK are current as required by law, contain the minutes of all meetings of the SNPK Board and stockholders of SNPK from its date of incorporation to the date of this Agreement, and adequately reflect all material actions taken by the SNPK Board and stockholders of SNPK. SNPK is not in violation of any of the provisions of the SNPK Charter Documents. Section 2.2 Capitalization of SNPK. A. The authorized capital stock of SNPK consists of five hundred fifty million (550,000,000) shares of Common Stock, par value $0.001, and fifty million (50,000,000) shares of Preferred Stock, of which twenty five million (25,000,000) shares have been designated as Class A Preferred Stock. There are three hundred seventy million five hundred thousand seven hundred fifty (370,500,750) shares of Common Stock and no shares of Preferred Stock issued and outstanding, immediately prior to this Share Exchange. B. All of the issued and outstanding shares of Common Stock of SNPK immediately prior to this Share Exchange are, and all shares of Common Stock of SNPK when issued in accordance with the terms hereof will be, duly authorized, validly issued, fully paid and non-assessable. Except with respect to securities to be issued to the HDS Managing Member pursuant to the terms hereof, as of the date of this Agreement there are no outstanding or authorized options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire or receive any shares of SNPKs capital stock, nor are there or will there be any outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights, pre-emptive rights or rights of first refusal with respect to SNPK or any Common Stock, or any voting trusts, proxies or other agreements, understandings or restrictions with respect to the voting of SNPKs capital stock. There are no registration or anti-dilution rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which SNPK is a party or by which it is bound with respect to any equity security of any class of SNPK. SNPK is not a party to, and it has no knowledge of, any agreement restricting the transfer of any shares of the capital stock of SNPK. The issuance of all of the shares of SNPK described in this Section 2.2 have been, or will be, as applicable, in compliance with U.S. federal and state securities laws and state corporate laws and no stockholder of SNPK has any right to rescind or bring any other claim against SNPK for failure to comply with the Securities Act, or state securities laws.
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C. Other than those shares referred to in Section 5.7 herein, there are no outstanding contractual obligations (contingent or otherwise) of SNPK to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, SNPK or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other person. Section 2.3Subsidiaries and Equity Investments. SNPK does not directly or indirectly own any capital stock or other securities of, or any beneficial ownership interest in, or hold any equity or similar interest, or have any investment in any corporation, limited liability company, partnership, limited partnership, joint venture or other company, person or other entity. Section 2.4Authorization, Validity and Enforceability of Agreements. SNPK has all corporate power and authority to execute and deliver this Agreement and all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement to perform its obligations hereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement by SNPK and the consummation by SNPK of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action of SNPK, and no other corporate proceedings on the part of SNPK are necessary to authorize this Agreement or to consummate the transactions contemplated hereby and thereby. This Agreement constitutes the valid and legally binding obligation of SNPK and is enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally. SNPK does not need to give any notice to, make any filings with, or obtain any authorization, consent or approval of any government or governmental agency or other person in order for it to consummate the transactions contemplated by this Agreement, other than filings that may be required or permitted under states securities laws, the Securities Act and/or the Securities Exchange Act of 1934, as amended (the Exchange Act). Section 2.5 No Conflict or Violation. Neither the execution and delivery of this Agreement by SNPK, nor the consummation by SNPK of the transactions contemplated hereby will: (i) contravene, conflict with, or violate any provision of the SNPK Charter Documents; (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, court, administrative panel or other tribunal to which SNPK is subject, (iii) conflict with, result in a breach of, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which SNPK is a party or by which it is bound, or to which any of its assets or properties are subject; or (iv) result in or require the creation or imposition of any encumbrance of any nature upon or with respect to any of SNPKs assets, including without limitation the SNPK Shares. Section 2.6 Agreements. Except as disclosed on documents filed with the Securities and Exchange Commission (the Commission ), SNPK is not a party to or bound by any contracts, including, but not limited to, any: A. employment, advisory or consulting contract; B. plan providing for employee benefits of any nature, including any severance payments; C. lease with respect to any property or equipment; D. contract, agreement, understanding or commitment for any future expenditure in excess of $5,000 in the aggregate; E. contract or commitment pursuant to which it has assumed, guaranteed, endorsed, or otherwise become liable for any obligation of any other person, entity or organization; or F. agreement with any person relating to the dividend, purchase or sale of securities, that has not been settled by the delivery or payment of securities when due, and which remains unsettled upon the date of this Agreement. SNPK has provided to HDS and the HDS Managing Member, prior to the date of this Agreement, true, correct and complete copies of each contract (whether written or oral), including each amendment, supplement and modification thereto (the SNPK Contracts). The Company shall satisfy all liabilities due under the SNPK Contracts as of the date of Closing. All such liabilities shall be satisfied or released at or prior to Closing. Any amounts accrued post-Closing shall be the sole responsibility of HDS.
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Section 2.7 Litigation. There is no action, suit, proceeding or investigation (Action) pending or, to the knowledge of SNPK, currently threatened against SNPK or any of its affiliates, that may affect the validity of this Agreement or the right of SNPK to enter into this Agreement or to consummate the transactions contemplated hereby or thereby. There is no Action pending or, to the knowledge of SNPK, currently threatened against SNPK or any of its affiliates, before any court or by or before any governmental body or any arbitration board or tribunal, nor is there any judgment, decree, injunction or order of any court, governmental department, commission, agency, instrumentality or arbitrator against SNPK or any of its affiliates. Neither SNPK nor any of its affiliates is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no Action by SNPK or any of its affiliates relating to SNPK currently pending or which SNPK or any of its affiliates intends to initiate. Section 2.8 Compliance with Laws. SNPK has been and is in compliance with, and has not received any notice of any violation of any, applicable law, order, ordinance, regulation or rule of any kind whatsoever, including without limitation the Securities Act, the Exchange Act, the applicable rules and regulations of the SEC or the applicable securities laws and rules and regulations of any state. Section 2.9 Financial Statements; SEC Filings. A. SNPKs financial statements (the Financial Statements) contained in its periodic reports filed with the SEC have been prepared in accordance with generally accepted accounting principles applicable in the United States of America (U.S. GAAP) applied on a consistent basis throughout the periods indicated, except that those Financial Statements that are not audited do not contain all footnotes required by U.S. GAAP. The Financial Statements fairly present the financial condition and operating results of SNPK as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments. SNPK has no material liabilities (contingent or otherwise). SNPK is not a guarantor or indemnitor of any indebtedness of any other person, entity or organization. SNPK maintains a standard system of accounting established and administered in accordance with U.S. GAAP. B. SNPK has timely made all filings with the SEC that it has been required to make under the Securities Act and the Exchange Act (the Public Reports). To the best of its knowledge, each of the Public Reports has complied in all material respects with the applicable provisions of the Securities Act, the Exchange Act, and the Sarbanes/Oxley Act of 2002 (the Sarbanes/Oxley Act) and/or regulations promulgated thereunder. There is no revocation order, suspension order, injunction or other proceeding or law affecting the trading of SNPKs Common Stock, it being acknowledged that none of SNPKs securities are approved or listed for trading on any exchange or quotation system. Section 2.9 Books, Financial Records and Internal Controls. All the accounts, books, registers, ledgers, SNPK Board minutes and financial and other records of whatsoever kind of SNPK have been fully, properly and accurately kept and completed; there are no material inaccuracies or discrepancies of any kind contained or reflected therein; and they give and reflect a true and fair view of the financial, contractual and legal position of SNPK. SNPK maintains a system of internal accounting controls sufficient, in the judgment of SNPK, to provide reasonable assurance that (i) transactions are executed in accordance with managements general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with managements general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any differences. Section 2.10 Employee Benefit Plans. SNPK does not have any Employee Benefit Plan as defined in the U.S. Employee Retirement Income Security Act of 1974 or similar plans under any applicable laws. Section 2.11 No Debt Obligations. Upon the Closing Date, SNPK will have no debt, obligations or liabilities of any kind whatsoever other than with respect to the transactions contemplated hereby. SNPK is not a guarantor of any indebtedness of any other person, entity or corporation. Section 2.12 No Broker Fees. No brokers, finders or financial advisory fees or commissions will be payable by or to SNPK or any of their affiliates with respect to the transactions contemplated by this Agreement. Section 2.13 No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or anticipated by SNPK to arise, between SNPK and any accountants and/or lawyers formerly or presently engaged by SNPK. SNPK is current with respect to fees owed to its accountants and lawyers. Section 2.14Disclosure. This Agreement and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf of SNPK in connection with the transactions contemplated by this Agreement do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.
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Section 2.15 No Integrated Offering. SNPK does not have any registration statement pending before the Commission or currently under the Commissions review and since the Closing Date, except as contemplated under this Agreement, SNPK has not offered or sold any of its equity securities or debt securities convertible into shares of Common Stock. Section 2.16 Employees. A. SNPK has one employee, Scott Beaudette. B. Other than Scott Beaudette, SNPK does not have any officers or directors. No director or officer of SNPK is a party to, or is otherwise bound by, any contract (including any confidentiality, non-competition or proprietary rights agreement) with any other person that in any way adversely affects or will materially affect (a) the performance of her duties as a director or officer of SNPK or (b) the ability of SNPK to conduct its business. Section 2.17Disclosure. This Agreement and any certificate attached hereto or delivered in accordance with the terms hereof by or on behalf of SNPK or the SNPK Controlling Stockholder in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained herein and/or therein not misleading. Section 2.18 No Assets or Real Property. Except as set forth on the most recent Financial Statements, SNPK does not have any assets of any kind. SNPK does not own or lease any real property. Section 2.19 Interested Party Transactions. Except as disclosed in Commission filings, no officer, director or shareholder of SNPK or any affiliate or associate (as such term is defined in Rule 405 of the Commission under the Securities Act) of any such person or entity, has or has had, either directly or indirectly, (a) an interest in any person or entity which (i) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by SNPK, or (ii) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish SNPK any goods or services; or (b) a beneficial interest in any contract or agreement to which SNPK is a party or by which it may be bound or affected. Section 2.20 Intellectual Property. Except as in documents filed with the Commission, SNPK does not own, use or license any intellectual property in its business as presently conducted. ARTICLE III REPRESENTATIONS AND WARRANTIES OF HDS HDS represents, warrants and agrees that all of the statements in the following subsections of this Article III, pertaining to HDS, are true and complete as of the date hereof. Section 3.1 Organization. HDS is a limited liability company duly organized, validly existing, and in good standing under the laws of Delaware and has the power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of HDSs Certificate of Formation or Operating Agreement. HDS has taken all actions required by law, its Certificate of Formation or Operating Agreement, or otherwise to authorize the execution and delivery of this Agreement. HDS has full power, authority, and legal capacity and has taken all action required by law, its Certificate of Formation or Operating Agreement, and otherwise to consummate the transactions herein contemplated. Section 3.2 Membership Interests. The number of Membership Interests HDS has issued is 1,000 Membership Units. The Membership Interests currently represent 100% of the Membership Units of HDS. Section 3.3 Subsidiaries and Predecessor Corporations. HDS does not own, beneficially or of record, any shares of any entity. Section 3.4 Financial Statements. HDS has kept all books and records since inception and such audited financial statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved. The balance sheets are true and accurate and present fairly as of their respective dates the financial condition of HDS. As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, HDS had no liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with generally accepted accounting principles, and all assets reflected therein are properly reported and present fairly the value of the assets of HDS, in accordance with
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generally accepted accounting principles. The statements of operations, stockholders equity and cash flows reflect fairly the information required to be set forth therein by generally accepted accounting principles.
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HDS has duly and punctually paid all Governmental fees and taxation which it has become liable to pay and has duly allowed for all taxation reasonably foreseeable and is under no liability to pay any penalty or interest in connection with any claim for governmental fees or taxation and HDS has made any and all proper declarations and returns for taxation purposes and all information contained in such declarations and returns is true and complete and full provision or reserves have been made in its financial statements for all Governmental fees and taxation. The books and records, financial and otherwise, of HDS are, in all material aspects, complete and correct and have been maintained in accordance with good business and accounting practices. All of HDSs assets are reflected on its financial statements, and HDS has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise. Section 3.5 Information. The information concerning HDS set forth in this Agreement is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading. Section 3.6 Absence of Certain Changes or Events . Since its inception, (a) there has not been any material adverse change in the business, operations, properties, assets, or condition (financial or otherwise) of HDS; and (b) HDS has not (i) made any material change in its method of management, operation or accounting, (ii) entered into any other material transaction other than sales in the ordinary course of its business; or (iii) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its members, managers, or employees or; and Section 3.7 Litigation and Proceedings. There are no actions, suits, proceedings, or investigations pending or, to the knowledge of HDS after reasonable investigation, threatened by or against HDS or affecting HDS or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. HDS does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances Section 3.8 No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of any indenture, mortgage, deed of trust, or other material agreement, or instrument to which HDS is a party or to which any of its assets, properties or operations are subject. Section 3.9 Compliance With Laws and Regulations. To the best of its knowledge, HDS has complied with all applicable statutes and regulations of any federal, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of HDS or except to the extent that noncompliance would not result in the occurrence of any material liability for HDS. This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities. Section 3.10 Approval of Agreement. The Managing Member of HDS has authorized the execution and delivery of this Agreement by HDS and has approved this Agreement and the transactions contemplated hereby. Section 3.11Valid Obligation. This Agreement and all agreements and other documents executed by HDS in connection herewith constitute the valid and binding obligation of HDS, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought. Section 3.12Acquisition Agreement. HDS represents and warrants that it owns 100% of the Acquired Assets pursuant to the Acquisition Agreement.
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HDS MANAGING MEMBER The HDS Managing Member hereby represents and warrants to SNPK: Section 4.1Authority. The HDS Managing Member has the right, power, authority and capacity to execute and deliver this Agreement to which the HDS Managing Member is a party, to consummate the transactions contemplated by this Agreement to which the HDS Managing Member is a party, and to perform the HDS Managing Members obligations under this Agreement to which the HDS Managing Member is a party. This Agreement has been duly and validly authorized and approved, executed and delivered by the HDS Managing Member. Assuming this Agreement has been duly and validly authorized, executed and delivered by the parties thereto other than the HDS Managing Member, this Agreement is duly authorized, executed and delivered by the HDS Managing Member and constitutes the legal, valid and binding obligation of the HDS Managing Member, enforceable against the HDS Managing Member in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally. Section 4.2 No Conflict. Neither the execution or delivery by the HDS Managing Member of this Agreement to which the HDS Managing Member is a party nor the consummation or performance by the HDS Managing Member of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the organizational documents of the HDS Managing Member (if the HDS Managing Member is not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which the HDS Managing Member is a party or by which the properties or assets of the HDS Managing Member are bound; or (c) contravene, conflict with, or result in a violation of, any Law or Order to which the HDS Managing Member, or any of the properties or assets of the HDS Managing Member, may be subject. Section 4.3 Litigation. There is no pending Action against the HDS Managing Member that involves the HDS Membership Interests or that challenges, or may have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement or the business of HDS and, to the knowledge of the HDS Managing Member, no such Action has been threatened, and no event or circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such Action. Section 4.4 Acknowledgment. The HDS Managing Member understands and agrees that the SNPK Shares to be issued pursuant to this Agreement have not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the SNPK Shares is being effected in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering or Regulation D promulgated thereunder or Regulation S for offers and sales of securities outside the U.S. Section 4.5 Stock Legends. The HDS Managing Member hereby agrees with SNPK as follows: A. Securities Act Legend Accredited Investors. The certificates evidencing the SNPK Shares issued to the HDS Managing Member will bear the following or a similar legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (3) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED.
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B. Other Legends. The certificates representing such SNPK Shares, and each certificate issued in transfer thereof, will also bear any other legend required under any applicable law, including, without limitation, any U.S. state corporate and state securities law, or contract. C. Opinion. The HDS Managing Member shall not transfer any or all of the SNPK Shares pursuant to Rule 144, under the Securities Act, Regulation S or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of the SNPK Shares, without first providing SNPK with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the SNPK) to the effect that such transfer will be made in compliance with Rule 144, under the Securities Act, Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws. Section 4.6 Ownership of Shares. The HDS Managing Member is both the record and beneficial owner of the HDS Membership Interests. The HDS Managing Member has and shall transfer at the Closing, good and marketable title to the HDS Membership Interests, free and clear of all liens, claims, charges, encumbrances, pledges, mortgages, security interests, options, rights to acquire, proxies, voting trusts or similar agreements, restrictions on transfer or adverse claims of any nature whatsoever, excepting only restrictions on future transfers imposed by applicable law. ARTICLE V CONDITIONS TO OBLIGATIONS OF HDS AND THE HDS MANAGING MEMBER The obligations of HDS and the HDS Managing Member to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by HDS and the HDS Managing Member at their sole discretion: Section 5.1 Representations and Warranties of SNPK. All representations and warranties made by SNPK in this Agreement shall be true and correct in all material respects on and as of the Closing Date, except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case, subject to the limitations applicable to the particular date or period, they will be true and correct in all material respects on and as of the Closing Date with respect to such date or period. Section 5.2 Agreements and Covenants. SNPK shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with on or prior to the Closing Date. Section 5.3 Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement shall be in full force and effect on the Closing Date. Section 5.4 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, which declares this Agreement invalid in any respect or prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of SNPK shall be in effect; and no action or proceeding before any court or governmental or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement. Section 5.5 Other Closing Documents. HDS shall have received such certificates, instruments and documents in confirmation of the representations and warranties of SNPK, SNPKs performance of its obligations hereunder, and/or in furtherance of the transactions contemplated by this Agreement as the HDS Managing Member and/or their respective counsel may reasonably request. Section 5.6 Documents. SNPK must have caused the following documents to be delivered to HDS and the HDS Managing Member: A. share certificates evidencing the SNPK Shares registered in the name of the HDS Managing Member; B. a Secretarys Certificate, dated the Closing Date, certifying attached copies of (A) the SNPK Charter Documents, (B) the resolutions of the SNPK Board approving this Agreement and the transactions contemplated hereby and thereby; and (C) the incumbency of each authorized officer of SNPK signing this Agreement to which SNPK is a party;
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C. an Officers Certificate, dated the Closing Date, certifying as to Sections 5.1, 5.2, 5.3, 5.4, 5.7, and 5.8.
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D. a Certificate of Good Standing of SNPK, dated as of a date not more than five business days prior to the Closing Date; E. this Agreement is duly executed; F. the resignation of Scott Beaudette as sole officer of SNPK as of the Closing Date; G. the resignation of Scott Beaudette as sole director of SNPK on the Closing Date; H. such other documents as HDS may reasonably request for the purpose of (i) evidencing the accuracy of any of the representations and warranties of SNPK, (ii) evidencing the performance of, or compliance by SNPK with any covenant or obligation required to be performed or complied with by SNPK, (iii) evidencing the satisfaction of any condition referred to in this Article V, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement. Section 5.7 Cancellation of Shares. Immediately following the issuance of the SNPK Shares to the HDS Managing Member, the SNPK Controlling Stockholder shall irrevocably cancel two hundred million (200,000,000) shares of the two hundred twenty five million (225,000,000) shares of the SNPK Common Stock he currently owns. Evidence of such cancellation shall be delivered to HDS. Section 5.8 No Material Adverse Effect. There shall not have been any event, occurrence or development that has resulted in or could result in a Material Adverse Effect on or with respect to SNPK. ARTICLE VI CONDITIONS TO OBLIGATIONS OF SNPK The obligations of SNPK to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by SNPK in its sole discretion: Section 6.1 Representations and Warranties of HDS and the HDS Managing Member. All representations and warranties made by HDS and the HDS Managing Member on behalf of themselves individually in this Agreement shall be true and correct on and as of the Closing Date except insofar as the representation and warranties relate expressly and solely to a particular date or period, in which case, subject to the limitations applicable to the particular date or period, they will be true and correct in all material respects on and as of the Closing Date with respect to such date or period. Section 6.2 Agreements and Covenants. HDS and the HDS Managing Member shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by each of them on or prior to the Closing Date. Section 6.4 Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, shall have been duly obtained and shall be in full force and effect on the Closing Date. Section 6.5 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or other governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, domestic or foreign, that declares this Agreement invalid or unenforceable in any respect or which prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of HDS shall be in effect; and no action or proceeding before any court or government or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement. Section 6.6 Other Closing Documents. SNPK shall have received such certificates, instruments and documents in confirmation of the representations and warranties of HDS and the HDS Managing Member, the performance of HDS and the HDS Managing Members respective obligations hereunder and/or in furtherance of the transactions contemplated by this Agreement as SNPK or its counsel may reasonably request.
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Section 6.7 Documents. HDS and the HDS Managing Member must deliver to SNPK at the Closing: A. documentation evidencing the number of HDS Membership Interests, along with such other documents evidencing the transfer of such HDS Membership Interests to SNPK; B. this Agreement to which the HDS and the HDS Managing Member is a party, duly executed; C. such other documents as SNPK may reasonably request for the purpose of (i) evidencing the accuracy of any of the representations and warranties of the HDS and the HDS Managing Member , (ii) evidencing the performance of, or compliance by HDS and the HDS Managing Member with, any covenant or obligation required to be performed or complied with by HDS and the HDS Managing Member, as the case may be, (iii) evidencing the satisfaction of any condition referred to in this Article VI, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement. Section 6.8 No Claim Regarding Stock Ownership or Consideration. There must not have been made or threatened by any Person, any claim asserting that such Person (a) is the holder of, or has the right to acquire or to obtain beneficial ownership of the HDS Membership Interests, or any other ownership interest in, HDS, or (b) is entitled to all or any portion of the SNPK Shares. ARTICLE VII POST-CLOSING AGREEMENTS Section 7.1 SEC Documents. From and after the Closing Date, in the event the SEC notifies SNPK of its intent to review any Public Report filed prior to the Closing Date or SNPK receives any oral or written comments from the SEC with respect to any Public Report filed prior to the Closing Date, SNPK shall promptly notify the SNPK Controlling Stockholder and the SNPK Controlling Stockholder shall reasonably cooperate with SNPK in responding to any such oral or written comments. ARTICLE VIII INDEMNIFICATION Section 8.1Survival of Provisions. The respective representations, warranties, covenants and agreements of each of the parties to this Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or before the Closing Date) shall expire on the first day of the three-year anniversary of the Closing Date (the Survival Period). The right to indemnification, payment of damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of damages, or other remedy based on such representations, warranties, covenants, and obligations. Section 8.2 Indemnification. A. Indemnification Obligations in favor of the Controlling Stockholders of SNPK. From and after the Closing Date until the expiration of the Survival Period, HDS shall reimburse and hold harmless the SNPK Controlling Stockholder (each such person and his heirs, executors, administrators, agents, successors and assigns is referred to herein as a SNPK Indemnified Party) against and in respect of any and all damages, losses, settlement payments, in respect of deficiencies, liabilities, costs, expenses and claims suffered, sustained, incurred or required to be paid by any SNPK Indemnified Party, and any and all actions, suits, claims, or legal, administrative, arbitration, governmental or other procedures or investigation against any SNPK Indemnified Party, which arises or results from a third-party claim brought against a SNPK Indemnified Party to the extent based on a breach of the representations and warranties with respect to the business, operations or assets of HDS. All claims of SNPK pursuant to this Section 8.2 shall be brought by the SNPK Controlling Stockholder on behalf of SNPK and those Persons who were stockholders of SNPK Company immediately prior to the Closing Date. In no event shall any such indemnification payments exceed $100,000 in the aggregate from HDS. No claim for indemnification may be brought under this Section 8.2(a) unless all claims for indemnification, in the aggregate, total more than $10,000.
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B. Indemnification in favor of HDS and the HDS Managing Member. From and after the Closing Date until the expiration of the Survival Period, the SNPK Controlling Stockholder will, severally and not jointly, indemnify and hold harmless HDS, the HDS Managing Member, and their respective members and managers, agents, attorneys and employees, and each person, if any, who controls or may control (within the meaning of the Securities Act) any of the forgoing persons or entities (hereinafter referred to individually as a HDS Indemnified Person) from and against any and all losses, costs, damages, liabilities and expenses arising from claims, demands, actions, causes of action, including, without limitation, legal fees, (collectively, Damages) arising out of any (i) any breach of representation or warranty made by SNPK or the SNPK Controlling Stockholder in this Agreement, and in any certificate delivered by SNPK or the SNPK Controlling Stockholder pursuant to this Agreement, (ii) any breach by SNPK or the SNPK Controlling Stockholder of any covenant, obligation or other agreement made by SNPK or the SNPK Controlling Stockholder in this Agreement, and (iii) a third-party claim based on any acts or omissions by SNPK or the SNPK Controlling Stockholder. In no event shall any such indemnification payments exceed $100,000 in the aggregate from all SNPK Controlling Stockholder. No claim for indemnification may be brought under this Section 8.2(b) unless all claims for indemnification, in the aggregate, total more than $10,000. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1 Publicity. No party shall cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without the consent of the other parties, unless a press release or announcement is required by law. If any such announcement or other disclosure is required by law, the disclosing party agrees to give the non-disclosing parties prior notice and an opportunity to comment on the proposed disclosure. Section 9.2 Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns; provided, however, that no party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other parties. Section 9.3 Fees and Expenses. Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses. Section 9.4 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested)or facsimile to the parties at the following addresses: If to HDS or the HDS Managing Member, to: Healthcare Distribution Specialists LLC 9337 Fraser Ave Silver Spring, MD 20910 Attn: Mackie Barch, Managing Member If to SNPK or the SNPK Controlling Stockholder, to: Sunpeaks Ventures, Inc. #106, 505 19 Ave SW Calgary, Alberta, T2S 0E4 Canada Attn: Scott Beaudette, Chief Executive Officer With a copy to (which copy shall not constitute notice): Carrillo Huettel, LLP 3033 Fifth Avenue, Suite 400 San Diego, CA 92103 or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others, and such notice or communication shall be deemed to have been given or made as of the date so delivered or mailed. No change in any of such addresses shall be effective insofar as notices under this Section 9.4 are concerned unless such changed address is located in the United States of America and notice of such change shall have been given to such other party hereto as provided in this Section 9.4.
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Section 9.5 Entire Agreement. This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement. No prior drafts of this Agreement and no words or phrases from any such prior drafts shall be admissible into evidence in any action or suit involving this Agreement. Section 9.6 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable. Section 9.7 Titles and Headings. The Article and Section headings contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof. Section 9.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. Fax and PDF copies shall be considered originals for all purposes. Section 9.9 Convenience of Forum; Consent to Jurisdiction. The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts of the State of California, County of San Diego and/or the United States District Court for Southern California, in respect of any matter arising under this Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any place where it may be found or giving notice to such party as provided in Section 9.4. Section 9.10 Enforcement of the Agreement. The parties hereto agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereto, this being in addition to any other remedy to which they are entitled at law or in equity. Section 9.11 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of Nevada without giving effect to the choice of law provisions thereof. Section 9.12 Amendments and Waivers. Except as otherwise provided herein, no amendment or waiver of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any such prior or subsequent occurrence.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
SUNPEAKS VENTURES, INC.
/s/ Scott Beaudette Name: Scott Beaudette Title: Chief Executive Officer
HEALTHCARE DISTRIBUTION SPECIALISTS LLC
/s/ Mackie Barch Name: Mackie Barch Title: Managing Member
SNPK CONTROLLING STOCKHOLDER
/s/ Scott Beaudette Scott Beaudette
HDS MANAGING MEMBER
/s/ Mackie Barch By: Mackie Barch
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SCHEDULE I HDS Members SNPK Class A SNPK Common Preferred Shares Shares To Be Newly To Be Newly Issued Issued 200,000,000 3,000,000
Name
Address
Tax-ID (if applicable)
HDS Membership Interests held
Mackie Barch
9337 Fraser Ave Silver Spring, MD 20910
1,000
TOTALS
1,000
200,000,000
3,000,000
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Exhibit 10.12 MANAGEMENT AGREEMENT This Management Agreement (the Agreement) entered into on February 13, 2012, and made effective as of the 13th day of February, 2012, (the Effective Date) by and between Sunpeaks Ventures, Inc., a Nevada corporation (the Company) and Mackie Barch (Mr. Barch). RECITALS: WHEREAS, Mr. Barch has expertise in the areas of corporate management, finance, investment and other matters relating to the business of the Company; and WHEREAS, the Company desires to avail itself of the expertise of Mr. Barch in the aforesaid areas, in which it acknowledges the expertise of Mr. Barch. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the parties hereto agree as follows: 1. Appointment. The Company hereby appoints Mr. Barch to render the advisory and consulting services described in Section 2 hereof for the term of this Agreement. 2. Services. During the term of this Agreement, Mr. Barch shall render to the Company, as the Companys Chief Executive Officer, President, Chief Financial Officer, Secretary and as a Director (the Services ) in relation to the operations of the Company, strategic planning, and financial oversight and including, without limitation, advisory and consulting services in relation to the selection, retention and supervision of independent auditors, the selection, retention and supervision of outside legal counsel, the selection, retention and supervision of financial advisors or consultants and the structuring and implementation of equity participation plans, employee benefit plans and other incentive arrangements for certain key executives of the Company. 3. Fees. In consideration of the performance of the Services contemplated by Section 2 hereof, the Company agrees to pay to Mr. Barch an aggregate fee (the Fee ) of $1,000 per calendar month. 4. Out-of-Pocket Expenses In addition to the compensation payable to Mr. Barch pursuant to Section 3 hereof, the Company shall, at the direction of Mr. Barch, pay directly, or reimburse Mr. Barch for his reasonable Out-of-Pocket Expenses. For the purposes of this Agreement, the term Out-of-Pocket Expenses shall mean the amounts actually paid by Mr. Barch in cash in connection with his performance of the Services, including, without limitation, reasonable (i) fees and disbursements (including, underwriting fees) of any independent auditors, outside legal counsel, consultants, investment bankers, financial advisors and other independent professionals and organizations, (ii) costs of any outside services or independent contractors such as financial printers, couriers, business publications or similar services and (iii) transportation, per diem, telephone calls, word processing expenses or any similar expense not associated with its ordinary operations. All reimbursements for Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable after presentation by Mr. Barch to the Company of the statement in connection therewith.
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5. Indemnification The Company will indemnify and hold harmless Mr. Barch from and against any and all losses, costs, expenses, claims, damages and liabilities (the Liabilities ) to which Mr. Barch may become subject under any applicable law, or any claim made by any third party, or otherwise, to the extent they relate to or arise out of the performance of the Services contemplated by this Agreement or the engagement of Mr. Barch pursuant to, and the performance by Mr. Barch of the Services contemplated by, this Agreement. The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability, cost or expense is determined by a court, in a final judgment from which no further appeal may be taken, to have resulted solely from the gross negligence or willful misconduct of Mr. Barch. If Mr. Barch is reimbursed hereunder for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that the Liabilities in question resulted solely from the gross negligence or willful misconduct of Mr. Barch. 6. Termination Unless sooner terminated pursuant to other provisions hereof, the Company agrees to engage Mr. Barch for a one (1) year period beginning on the Effective Date, and thereafter automatically extend the term of this Agreement for successive one-year periods unless and until such time as either party shall give written notice to the other at least 30 days prior to the expiration of the then current term that no such automatic extension shall occur, in which event Mr. Barch engagement with the Company shall terminate on the expiration of the then current term. The provisions of Sections 5, 7 and 8 and otherwise as the context so requires shall survive the termination of this Agreement. 7. Other Activities Nothing herein shall in any way preclude Mr. Barch from engaging in any business activities or from performing services for his own account or for the account of others, including for companies that may be in competition with the business conducted by the Company. 8. General. (a) No amendment or waiver of any provision of this Agreement, or consent to any departure by either party from any such provision, shall be effective unless the same shall be in writing and signed by the parties to this Agreement, and, in any case, such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. (b) This Agreement and the rights of the parties hereunder may not be assigned without the prior written consent of the parties hereto; provided, however, that Mr. Barch may assign or transfer his duties or interests hereunder to an affiliate at the sole discretion of Mr. Barch. (c) This Agreement shall constitute the entire agreement between the parties with respect to the subject matter hereof, and shall supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto. (d) This Agreement shall be governed by, and enforced in accordance with, the laws of the State of Nevada (excluding the choice of law principles thereof). The parties to this Agreement hereby agree to submit to the non-exclusive jurisdiction of the federal and state courts located in the state of Nevada in any action or proceeding arising out of or relating to this Agreement. (e) This Agreement may be executed in two or more counterparts, and by different parties on separate counterparts. Each set of counterparts showing execution by all parties shall be deemed an original, and shall constitute one and the same instrument. (f) The waiver by any party of any breach of this Agreement shall not operate as or be construed to be a waiver by such party of any subsequent breach.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers or agents as set forth below.
Sunpeaks Ventures, Inc. /s/ Scott Beaudette Name: Scott Beaudette Its: President
/s/ Mackie Barch Mackie Barch
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Exhibit 10.13 Made this 9th day of March, 2011, between Great Spaces, LLC, Landlord, and Amerisure Pharmaceuticals, LLC, Tenant: Witnesseth That the Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord the premises located at 9337 Fraser Avenue, Silver Spring, MD, totaling about 2000 square feet of gross floor area. The term of the lease shall be one (I) year, commencing on March 9, 20 II, at a rent of Seventeen Hundred Seventy-Five Dollars ($1,775.00) per month. The Tenant covenants and agrees: 1. To pay rent in monthly installments of Seventeen Hundred Seventy-Five Dollars ($1,775.00) each, in advance, on the first day of each and every month of the term. Rent shall be increased by the greater of 3% , or the increase in the Consumer Price Index (CPI) year over year, but shall not increase more than 5% per year. A late fee of One Hundred Dollars ($100.00) shall be added to the rent in the event Landlord receives rent later than the fifth of the month. Any outstanding unpaid rent shall also accrue interest at the rate of eighteen percent (18%) per annum. Note that Landlord will provide tenant with the first months rent free of charge, but that the pro-rated 21 days for April rent will be due at the signing of this lease, equaling Twelve Hundred Forty-Two Dollars ($1,242.00). 2. To pay a security deposit of Seventeen Hundred Seventy-Five Dollars (1,775.00), to Landlord upon execution of this Lease. Te security deposit shall be returned in full to Tenant at the termination of this Lease, without any accumulated interest, except that any damages incurred by Tenant to the building or common areas will be deducted. 3. That, with consent of Landlord, this lease can continue on a month-to-month basis, but shall be terminated when either Landlord or Tenant provides the other with Ninety (90) days written notice. 4. That space in the parking lot will be provided for up to four (4) cars. Under no circumstances shall more than four (4) vehicles park in the parking lot at one time unless other arrangements are made with Landlord. No trailers or large trucks shall be parked on the premises, unless specifically approved in writing by the Fraser Avenue Unit Owners Committee. Standard sized pickup trucks or vans are acceptable. 5. To use the premises for office space, and storage. 6. To do nothing and to permit nothing to be done on the premises which will contravene any fire insurance policy covering the same. If Tennants use or occupancy of the premises, or his act or omission or any act or omission permitted by him, increases the premium of any fire insurance policy, Tennant shall pay such increase. Tenant agrees to fully comply with any requirements or recommendation of the Insurance Services Office of Maryland and/or the National Fire Protection Association. 7. To pay all bills for electricity, gas, fuel, power, trash removal, telephone, and all other utilities as same become due. Landlord will pay water bill up to $100 per three-month period. Tenant will be responsible for amounts over $100 if the water exceeds that amount in any three-month period. 8. Rent paid by check will not be considered paid until the check has cleared the bank. Checks returned by the Tenants bank are subject to a $50.00 returned check fee. 9. A dumpster may be located on the premises, provided Landlord specifically approves placement. 10. To hold Landlord and his Agent free and harmless from any and all loss, claim, or damage by reason of any accident, injury or damage to any person or property occurring on or caused by the lease premises or any access thereto or any area adjacent to
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said premises. 11. To maintain and pay for public liability insurance with bodily injury limits of not less than $1,000,000.00 per occurrence and $500,000.00 per person inured, and property damage limits of not less than $50,000.00 in which insurance policy Landlord shall be an additional insured, and to furnish Landlord with a certificate from the insurer that such insurance has been issued and that Landlord will be notified by the insurer prior to cancellation or expiration. 12. Not to make any structural alteration or additions without the prior consent of the Landlord, and to pay for all such alterations or additions. At Landlords option, Tenant shall restore the premises to their original condition at the end of the term or such alteration shall become the property of Landlord.
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13. To comply with all applicable laws, ordinances, rules and regulations, including those of the Fraser Avenue Owners Committee. 14. To abide by all rule, regulations, and stipulations of the Landlord which are necessary or advisable for the safety, care, protection, or cleanliness of the premises or persons on or in the vicinity thereof. 15. That if Tenant makes any assignment for the benefit of creditors, or if any proceedings are commenced to have Tenant declared bankrupt or insolvent, or if a receiver or Trustee is appointed to take charge of Tenants affairs, then Landlord may terminate this lease forthwith, and Tenant shall remain liable for all damages and rent up to the date of such event. 16. That this lease is and shall remain subject and subordinate to all present and future mortgages and deeds of trust affecting said premises, and as well as all covenants and restrictions of record. Tenant agrees to execute on demand all appropriate papers to effectuate the provisions of this paragraph. Tenant also appoints Landlord irrevocably as his attorney-in-fact to execute all such appropriate papers. 17. Upon the expiration or termination of this lease, to surrender the premises in good and clean condition, ordinary wear and tear excepted; at the same time, to surrender all equipment of the Landlord in good, clean and operation condition, ordinary wear and tear excepted. 18. Not to place any signs, advertisements, or notices on the exterior or any wall, window, or door of the building without the landlords prior consent. 19. Tenant agrees that failure to comply with any of the above terms may result in immediate cancellation of this lease and eviction. Landlord and Tenant mutually covenant and agree: 20. That if the premises shall be damaged or destroyed by fire or other casualty, Landlord shall have 90 days within which to repair or commence to restore the same. Until the premises are restored, the rent shall be abated in an amount corresponding to the period and the extent to which the premises are untenantable. If the Landlord shall fail to restore or commence to restore the premises with 90 days, this lease shall thereupon terminate. 21. That Landlord, at his cost and expense, shall keep the roof, all foundations and exterior walls in a state of good repair. Tenant, at his cost and expense, shall keep in a state of good repair, maintenance, and cleanliness, all other parts of the premises that he uses as part of this lease. 22. That Landlord, at his cost and expense, shall provide that air conditioning and heating appliances work at time of signing of this lease. 23. That Landlord shall have the right to enter the premises at all reasonable hours to examine the same as well as to make any alterations and repairs to the premises or to contiguous premises. 24. That Landlord shall have the right, at any time during the pendency of this lease to show the premises to persons wishing to rent or purchase the same sand that Tenant will permit a notice of for rent or for sale to be placed upon the front of the premises and remain thereon without hindrance or molestation. 25. That any waiver of a default hereunder shall not be deemed a waiver of any subsequent default.
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26. That Tenant shall not transfer or assign this or make any sublease without the written consent of the Landlord. 27. If Tenant shall remain in possession after the expiration of the lease, he shall, in the absence of any agreement to the contrary, be liable to the Landlord in an amount twice the monthly rent elsewhere provided for herein for any month or part thereof during which he shall remain in possession. Acceptance by landlord of any sum from the Tenant after the expiration of this lease shall not constitute the Tenant a hold over Tenancy. 28. That Landlord shall have the right to distrain for rent and for any other amount due and payable by the Tenant hereunder, if the same is not paid when due, without notice to or demand upon the Tenant.
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29. That if there is any default by Tenant hereunder, Landlord shall have the right to re-enter and take possession of the premises, without notice to or demand upon Tenant. 30. Tenant agrees to pay all reasonable costs, attorneys fees and expenses that shall be made and incurred by the Landlord in enforcing the covenants and agreements of this lease, including those for collection or rent. 31. That this lease shall be binding upon and insure to the benefit of the parties hereto, their respective heirs, executors, administrator, successors, and assigns. 32. Landlord accepts taxes and common area repairs or pass-throughs. IN WITNESS WHEREOF, the parties have caused these precepts to be duly executed the day and year first above written. Landlord: /s/ Roger Telschow Great Spaces, LLC by Roger Telschow, President 9335 Fraser Aenue Silver Spring, MD 20910 301-509-9371 301-585-4899 FAX roger@journeydeep.com
Tenant: /s/ Mackie Barch Amerisure Pharmaceuticals 10417 Armory Ave, Unit C, Kensington, MD 202-274-5404 or 301-455-0207
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ADDITIONAL PROVISIONS TO LEASE ENVIRONMENTAL RESPONSIBILITIES. Tenant shall not allow, permit or cause: (a) the generation, use, accumulation, storage, treatment, transportation, disposal, release or threat of release of hazardous substances (as defined in the Comprehensive Environmental Response, Compensation, Liability Act of 1989 (CCERCLA) 42 U.S.C. Section 9601 et seq ., and regulation pursuant thereto, as amended) or petroleum product on the Premises, parking areas, sidewalks, or other appurtenances to the Premises, except for hazardous substances or petroleum product which are used in the ordinary course of Tenants business ( for business rental) and are present on the Premises in normal and reasonable amounts and are properly stored in a safe and lawful manner, provided that a list of such substances and petroleum products, showing the manner of storage and quantities stored, is provided to Landlord: (b) the spilling, leaking, or other release of hazardous substance or petroleum products on or from the Premises, parking areas, sidewalks, or other appurtenances to the Premises (other than de minimis quantities in connection with the operation of motor vehicles); (c) the accumulation of ay debris or other solid waste (except rubbish generating in the ordinary course of Tenants business or residence for normal scheduled disposal in compliance with all applicable laws) on the Premises. Tenant shall obtain and maintain any and all necessary permits and approvals, including but not limited to permits and approvals required for the generation, use, accumulation, storage, treatment, transportation or disposal of any substances and petroleum products identified above which are used in the ordinary course of Tenants business. Tenant shall comply with all applicable governmental operation reporting and notification requirements for such substances. Any costs or expenses associated with obtaining or maintaining such permits, or complying with such operation, reporting or notification requirements shall be the sole responsibility of Tenant. In the event Tenant fails to pay any such costs or expenses, Landlord may, but shall not be required to, pay same, and may collect all amounts so paid from Tenant as additional rent. Tenant shall notify Landlord immediately upon learning that : (i) any duty described in this Section has been violated; (ii) there has been a release, discharge or disposal of any hazardous substance or petroleum product on the Premises or on any property near the Premises; (iii) radon gas, urea formaldehyde, or any other toxic or hazardous gas has been detected on or in the Premises or any other area within the building of which the Premises are a part; or (iv) the Premises are the subject of any third party claim or action, or threat thereof, including, but not limited to, any claim or action, or threat thereof, from a governmental agency or official, because of any environmental condition on or originating from the Premises or arising in connection with Tenants operation of the Premises. Tenant shall promptly provide Landlord with copies of all correspondence to or from such third parties regarding environmental conditions on or origination from the Premises or arising in connection with the operation of the Premises. ENVIRONMENTAL INDEMNITY. Tenant shall indemnify and hold harmless Landlord and Agent, together with their officers, directors, stockholders, employees and agents (the Indemnified Parties) from any and all liabilities (including strict liability), penalties, demands, actions, costs and expenses (including strict limitation, attorneys fees, fines, remedial and response costs and any continuing monitoring or closure costs) incurred or suffered by the Indemnified Parties, or asserted by any third party including, but not limited to, any governmental agency or official, against the Indemnified Parties due to the breach of-Tenants duties and obligation set forth in the preceding Section. This indemnification shall survive the expiration or earlier termination of this Lease or any renewal or extension of this Lease, including any extensions on a month to month basis. To the extent such terms, covenants and condition are not inconsistent with this Lease Renewal and Amendment Agreement, all other terms, covenants and conditions as contained in the above-referenced Lease shall be binding on the parties and remain in full force and effect during the renewal period hereby created
/s/ Roger Telschow Landlord agent
3/9/2011 or Date
/s/ Mackie Barch Tenant
3/9/2011 Date
/s/ Mackie Barch Tenant
3/9/2011 Date
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EXHIBIT 21.1 LIST OF SUBSIDIARIES OF SUNPEAKS VENTURES, INC.
1. Healthcare Distribution Specialists LLC Jurisdiction of Formation: Names under which business is conducted: State of Delaware Healthcare Distribution Specialists LLC
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Exhibit 99.1
AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Financial Statements For the Years Ended December 31, 2010 and 2009
Report of Independent Registered Public Accounting Firm 2 Balance Sheets 3 Statements of Operations 4 Statements of Stockholders Equity 5 Statements of Cash Flows 6 Notes to the Financial Statements 7
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Amerisure Pharmaceuticals LLC (A Development Stage Company) We have audited the accompanying balance sheets of Amerisure Pharmaceuticals LLC (A Development Stage Company) (the Company) as of December 31, 2010 and 2009 and the related statements of operations, stockholders' equity and cash flows for the years then ended and the period from September 19, 2008 (inception) to December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amerisure Pharmaceuticals LLC (A Development Stage Company) as of December 31, 2010 and 2009 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not established a source of revenues sufficient to cover its operating costs, and as such, has incurred an operating loss since its inception. These matters raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. See note 1 to the financial statements for further information regarding this uncertainty. /s/ M&K CPAS, PLLC www.mkacpas.com Houston, Texas September 13, 2011
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Balance Sheets (expressed in US dollars) December 31, 2010 $ Assets Current Assets Cash Accounts receivable Total Assets 591 43,897 44,488 December 31, 2009 $
Liabilities and Stockholders Deficit Current Liabilities Accounts payable and accrued liabilities related party Total Current Liabilities Stockholders Deficit 50,621 50,621
Members stock: unlimited shares authorized, without par value 1,000 shares issued and outstanding, respectively Deficit accumulated during the development stage Total Stockholders Deficit Total Liabilities and Stockholders Deficit
1,000 (7,133) (6,133) 44,488
(The accompanying notes are an integral part of these financial statements) 3
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Statements of Operations (Expressed in US dollars)
Year ended December 31, 2010 $ Revenue Operating Expenses General and administrative Professional fees Travel and entertainment Total Operating Expenses Net Loss Net income (loss) per share, basic and diluted Weighted average shares outstanding 6,073 452 608 7,133 (7,133) (7.13) 1,000
Year ended December 31, 2009 $
From September 19, 2008 (date of inception) to December 31, 2010 $
1,000
6,073 452 608 7,133 (7,133)
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Statements of Stockholders Deficit From September 19, 2008 (date of inception) to December 31, 2010 (Expressed in US dollars) Common Stock Deficit Accumulated During the Development Stage $
Shares # Balance September 19, 2008 (Date of Inception)
Value $
Total $
1,000
Balance December 31, 2008 and 2009 Contribution for members shares Net loss for the year Balance December 31, 2010
1,000 1,000 1
1,000 1,000
(7,133) (7,133)
1,000 (7,133) (6,133)
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Statements of Cash Flows (Expressed in US dollars) Accumulated from September 19, 2008 (Date of Inception) to December 31, 2010 $
Year ended December 31, 2010 $ Operating Activities Net loss for the period Changes in operating assets and liabilities: Accounts receivable Accounts payable and accrued liabilities related party Net Cash Used In Operating Activities Financing Activities Proceeds from issuance of members shares Net Cash Provided by Financing Activities Increase in Cash Cash Beginning of Period Cash End of Period 1,000 1,000 591 591 (7,133)
Year ended December 31, 2009 $
(7,133)
(43,897) 50,621 (409)
(43,897) 50,621 (409)
1,000 1,000 591 591
Supplemental disclosures: Interest paid Income tax paid
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Notes to the Financial Statements Year ended December 31, 2010 (Expressed in US dollars) 1. Nature of Operations and Continuance of Business Amerisure Pharmaceuticals LLC (the Company) was incorporated as a limited liability company in the state of Delaware on September 19, 2008. The Company is in the business of reselling pharmaceutical drugs to third party customers throughout the United States. Going Concern These financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2010, the Company has a working capital deficit of $6,133, and an accumulated deficit of $7,133. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. These factors raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern. 2. Significant Accounting Policies (a) Basis of Presentation The financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States. The Companys fiscal year-end is December 31. (b) Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets, valuation of convertible debenture, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. (c) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2010 and 2009, there were no cash equivalents. (d) Basic and Diluted Net Loss Per Share The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the
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exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at December 31, 2010 and 2009, the Company had no potentially dilutive shares.
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Notes to the Financial Statements Year ended December 31, 2010 (Expressed in US dollars) 2. Significant Accounting Policies (continued) (e) Comprehensive Loss ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2010 and 2009, the Company had no items representing comprehensive income or loss. (f) Financial Instruments and Fair Value Measures ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Companys financial instruments consist principally of cash, accounts receivable, and accounts payable and accrued liabilities. Pursuant to ASC 820, the fair value of our cash is determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. (g) Revenue Recognition The Company plans to recognize revenue from pharmaceutical sales. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. Currently, all sales are on behalf of Healthrite Pharmaceuticals, a company controlled by the President and Director of the Company. Healthrite Pharmaceuticals is a pharmacy and is prohibited from distributing pharmaceuticals across state lines. In accordance with ASC 605-45-45, the Company acts as an agent in the revenue process whereby all sales of pharmaceutical drugs on behalf of Healthrite Pharmaceuticals are presented on a net basis. Therefore, the Company did not record any revenues for the years ended December 31, 2010 or 2009. (h) Accounts Receivable
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Accounts receivable are stated at their principal balances and are non-interest bearing and unsecured. Management conducts a periodic review of the collectability of accounts receivable and deems all unpaid amounts greater than 30 days to be past due. If uncertainty exists with respect to the recoverability of certain amounts based on historical experience or economic climate, management will establish an allowance against the outstanding receivables. At December 31, 2010 and 2009, the Company recorded an allowance for doubtful accounts of $nil.
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Notes to the Financial Statements Year ended December 31, 2010 (Expressed in US dollars) 2. Significant Accounting Policies (continued) (i) Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. 3. Members Shares On February 11, 2010, the Company issued 1,000 members shares to the President of the Company for $1,000. 4. Related Party Transactions As at December 31, 2010, the Company owed $50,621 (2009 - $nil) to a company controlled by the President and Director of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand. 5. Concentrations During the year ended December 31, 2010, 97% (2009 nil) of sales and 85% (2009 nil) of accounts receivable are derived from one customer. 6. Income Taxes The Company has $7,133 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes for the years ended December 31, 2010 and 2009 as a result of the following: 2010 $ Net loss before taxes Statutory rate Computed expected tax recovery Change in valuation allowance Income tax provision (7,133) 34% 2,425 (2,425) 2009 $
The significant components of deferred income tax assets and liabilities as at December 31, 2010 and 2009 after applying enacted corporate income tax rates are as follows: 2010 $ Net operating losses carried forward 2,425 2009 $
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Total gross deferred income tax assets Valuation allowance Net deferred tax asset
2,425 (2,425)
The Company has incurred operating losses of $7,133 which, if unutilized, will begin to expire in 2030. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset by a valuation allowance. As at December 31, 2010 and 2009, the Company has no uncertain tax positions.
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AMERISURE PHARMACEUTICALS LLC (A Development Stage Company) Notes to the Financial Statements Year ended December 31, 2010 (Expressed in US dollars) 7. Subsequent Event On June 14, 2011, the Company entered into an asset acquisition agreement (the Agreement) with Global Nutritional Research LLC (GNR), a limited liability company in Maryland. Under the terms of the Agreement, the Company would acquire all assets, properties, goodwill, and other rights related to GNR in exchange for assuming all debts currently held by GNR. The Agreement was formally ratified and signed by the Company and GNR on August 12, 2011. There were no additional subsequent events through the date of issuance of the audited financial statements.
10
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Exhibit 99.2
HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Financial Statements For the Nine Months Ended September 30, 2011 and 2010 (unaudited)
Balance Sheets 2 Statements of Operations 3 Statements of Cash Flows 4 Notes to the Financial Statements 5
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Consolidated Balance Sheets (expressed in US dollars) (unaudited) September 30, 2011 $ Assets Current Assets Cash Accounts receivable Inventory Prepaid expenses and deposits Total Current Assets Property and equipment Total Assets 39,889 118,446 39,506 907 198,748 51,136 249,884 591 43,897 44,488 44,488 December 31, 2010 $
Liabilities and Stockholders Deficit Current Liabilities Accounts payable and accrued liabilities Line of Credit Due to related parties Total Current Liabilities Stockholders Deficit 11,996 140,488 434,601 587,085 50,621 50,621
Members stock: unlimited shares authorized, without par value 1,000 shares issued and outstanding, respectively Additional paid-in capital Deficit accumulated during the development stage Total Stockholders Deficit Total Liabilities and Stockholders Deficit
1,000 (99,671) (238,530) (337,201) 249,884
1,000 (7,133) (6,133) 44,488
(The accompanying notes are an integral part of these financial statements)
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Consolidated Statements of Operations (Expressed in US dollars) (unaudited)
For the nine months ended September 30, 2011 $ Revenue Cost of sales Gross profit Operating Expenses General and administrative Professional fees Travel and entertainment Total Operating Expenses Net Loss 84,196 143,881 5,838 233,915 (231,397) 3,562 1,044 2,518
For the nine months ended September 30, 2010 $
From September 19, 2008 (date of inception) to September 30, 2011 $ 3,562 1,044 2,518
3,122 318 6 3,446 (3,446)
90,269 144,333 6,446 241,048 (238,530)
Net income (loss) per share, basic and diluted Weighted average shares outstanding
(231.40) 1,000
(3.45) 1,000
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Consolidated Statements of Cash Flows (Expressed in US dollars) (unaudited) Accumulated from September 19, 2008 (Date of Inception) to September 30, 2011 $
For the nine months ended September 30, 2011 $ Operating Activities Net loss for the period Items not involving cash: Depreciation Changes in operating assets and liabilities: Accounts receivable Inventory Prepaid expenses Accounts payable and accrued liabilities Due to related parties Net Cash Used In Operating Activities Investing Activities Purchase of property and equipment Net Cash Provided by Financing Activities Financing Activities Proceeds from line of credit Proceeds from issuance of members shares Net Cash Provided by Financing Activities Increase in Cash Cash Beginning of Period Cash End of Period 10,000 10,000 39,298 591 39,889 (54,123) (54,123) (231,397)
For the nine months ended September 30, 2010 $
(3,442)
(238,530)
2,987
2,987
(74,549) 1,044 (907) 9,263 376,980 83,421
(19,175) 22,019 (598)
(118,446) 1,044 (907) 9,263 427,601 83,012
(54,123) (54,123)
1,000 1,000 402 402
10,000 1,000 11,000 39,889 39,889
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Supplemental disclosures: Interest paid Income tax paid Non-cash investing and financing activities: Business combination under common control
140,221
140,221
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2011 (Expressed in US dollars) (unaudited) 1. Nature of Operations and Continuance of Business Healthcare Distribution Specialists Inc. (the Company) was incorporated as a limited liability company in the state of Delaware on September 19, 2008 under the name Amerisure Pharmaceuticals LLC. During the period ended September 30, 2011, the Company changed its name to Healthcare Distribution Specialists Inc. The Company is in the business of reselling pharmaceutical drugs to third party customers throughout the United States. On August 1, 2011, the Company entered into an acquisition agreement with Global Nutritional Research, a manufacturer and distributor of the vitamin Clotamin. Going Concern These financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at September 30, 2011, the Company has a working capital deficit of $388,337, and an accumulated deficit of $238,530. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. These factors raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern. 2. Significant Accounting Policies (a) Basis of Presentation The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States. The Companys fiscal year-end is December 31. (b) Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets, valuation of convertible debenture, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. (c) Interim Financial Statements These interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Companys financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. (d) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash
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equivalents. As at September 30, 2011 and December 31, 2010, there were no cash equivalents.
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2011 (Expressed in US dollars) (unaudited)
2. Significant Accounting Policies (continued) (e) Basic and Diluted Net Loss Per Share The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at September 30, 2011 and December 31, 2010, the Company had no potentially dilutive shares. (f) Comprehensive Loss ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2011 and December 31, 2010, the Company had no items representing comprehensive income or loss. (g) Property and Equipment Property and equipment is comprised of furniture and equipment and leasehold improvements and is amortized on a straight-line basis over an expected useful life of three years and five years, respectively. Maintenance and repairs are charged to expense as incurred. (h) Line of Credit The line of credit is held at a financial institution in the United States, and is secured against personal assets of the President and Director of the Company, due interest at US prime rate plus 1%, and due on demand. As at September 30, 2011, the Company is in good standing and there are no outstanding debt covenants. (i) Revenue Recognition The Company plans to recognize revenue from pharmaceutical sales. Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. Currently, all sales are on behalf of Healthrite Pharmaceuticals (Healthrite), a company controlled by the President and Director of the Company. Healthrite is a pharmacy and is prohibited from distributing pharmaceuticals across state lines. In accordance with ASC 605-45-45, the Company acts as an agent in the revenue process whereby all sales of pharmaceutical drugs on behalf of Healthrite are presented on a net basis. Therefore, the Company did not record any revenues for the nine months ended September 30, 2011 and for the year ended December 31, 2010 with the exception of Clotamin sales subsequent to the acquisition of GNR on August 1, 2011. (j) Accounts Receivable Accounts receivable are stated at their principal balances and are non-interest bearing and unsecured. Management conducts a
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periodic review of the collectability of accounts receivable and deems all unpaid amounts greater than 30 days to be past due. If uncertainty exists with respect to the recoverability of certain amounts based on historical experience or economic climate, management will establish an allowance against the outstanding receivables. At September 30, 2011 and December 31, 2010, the Company recorded an allowance for doubtful accounts of $nil.
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2011 (Expressed in US dollars) (unaudited) 2. Significant Accounting Policies (continued) (k) Inventory Inventory is comprised of Clotamin and is recorded at the lower of cost or net realizable value on a first in first out (FIFO) basis. The Company establishes inventory reserves for estimated obsolete or unmarketable inventory equal to the differences between the cost of inventory and the estimated realizable value based upon assumptions about future and market conditions. Shipping and handling costs are classified as a component of cost of sales in the statement of operations. (l) Financial Instruments and Fair Value Measures ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Companys financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, line of credit, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash is determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. (n) Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2011 (Expressed in US dollars) (unaudited) 3. Business Combination On August 1, 2011, the Company acquired all the product, rights, trademarks, domains, and licenses related to Clotamin from Global Nutritional Research LLC (GNR), a limited liability company incorporated in Maryland for which the President and Director of the Company holds a 44% interest and the remaining 56% is held by a family member of the President and Director of the Company, in exchange for the assumption of all current liabilities and debt of GNR. The acquisition cost is comprised of: $ Assets Inventory Liabilities Accounts payable Due to Healthrite Line of credit Net liabilities assumed
40,550
2,733 7,000 130,488
(99,671)
As the acquisition of GNR is considered to be a merger of common control, the net liabilities assumed of $99,671 was recorded as a charge against additional paid-in capital. 4. Property and Equipment September 30, 2011 Net Carrying Value $ 18,917 32,219 51,136 December 31, 2010 Net Carrying Value $
Cost $ Furniture and equipment Leasehold improvements 19,917 34,206 54,123 5. Inventory
Accumulated Depreciation $ 1,000 1,987 2,987
September 30, 2011 $ (unaudited) Clotamin 39,506 39,506
December 31, 2010 $
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6. Line of Credit As at September 30, 2011, the Company owed $140,488 (December 31, 2010 - $nil) for a line of credit, that is secured against the assets of the Company, bears interest a US prime rate plus 1%, and is due on demand.
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HEALTHCARE DISTRIBUTION SPECIALISTS INC. (formerly Amerisure Pharmaceuticals LLC) (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2011 (Expressed in US dollars) (unaudited) 7. Related Party Transactions (a) As at September 30, 2011, the Company owed $284,501 (December 31, 2010 - $50,621) to a company controlled by the President and Director of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand. (b) As at September 30, 2011, the Company owed $150,100 (December 31, 2010 - $nil) to the President and Director of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand. 8. Subsequent Events On February 13, 2012, the Company entered into a share exchange agreement (the Agreement) whereby Sunpeaks Ventures Corp. (Sunpeaks), a Nevada company listed on the OTC Bulletin Board, acquired a 100% interest of the Company in exchange for 200,000,000 common shares and 3,000,000 Class A preferred shares of Sunpeaks.
_____________________________________ Created by Morningstar Document Research http://documentresearch.morningstar.com Source: SUNPEAKS VENTURES, INC., 8-K, February 17, 2012
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SNPK Financials

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Case Study: Scam, Fantasy or FraudTake your pick.

press release March 12, 2012, 4:05 p.m. EDT

1 Sunpeaks Ventures Comments on Current U.S. Prescription Drug Shortage Crisis

SECURITIES AND EXCHANGE COMMISSION

Nevada (State or other jurisdiction of Incorporation)

000-54523 (Commission File Number)

27-0777112 (IRS Employer Identification Number)

(Former name or former address, if changed since last report)

UNREGISTERED SALES OF EQUITY SECURITIES.

Exhibits. The following exhibit is furnished herewith:

Exhibit Number 99.1

SECURITIES AND EXCHANGE COMMISSION

Nevada (State or other jurisdiction of Incorporation)

000-54523 (Commission File Number)

27-0777112 (IRS Employer Identification Number)

July 15, 2008

Current Assets Current Liabilities Working Capital (Deficit) Cash Flows

December 31, 2010 $ (18,120) 12,525 (5,595)

Title of Class Common Class A Preferred Common Class A Preferred (4)

Common Class A Preferred (4) Common Class A Preferred (4)

Total Voting Rights of All Classes (1)

Name and Principal Position (a)

Salary ($) (c) 20,00 0 20,00 0

Bonus ($) (d) -0-

Nonqualified Deferred Compensatio n Earnings ($) (h) -0-

All other compensatio n ($) (i) -0-

Total ($) (j) 20,00 0 20,00 0

Exhibit 10.7 UNSECURED PROMISSORY NOTE

By: /s/ Scott Beaudette Name: Scott Beaudette Title: CEO

Dated: February 13, 2012 Sunpeaks Ventures, Inc.

Dated: February 13, 2012 Scott Beaudette

By:/s/ Scott Beaudette Name: Scott Beaudette

Dated: February 13, 2012 Carrillo Huettel, LLP

SUNPEAKS VENTURES, INC.

HEALTHCARE DISTRIBUTION SPECIALISTS LLC

/s/ Mackie Barch Name: Mackie Barch Title: Managing Member

SNPK CONTROLLING STOCKHOLDER

/s/ Scott Beaudette Scott Beaudette

HDS MANAGING MEMBER

/s/ Mackie Barch By: Mackie Barch

Tax-ID (if applicable)

HDS Membership Interests held

9337 Fraser Ave Silver Spring, MD 20910

/s/ Mackie Barch Mackie Barch

/s/ Roger Telschow Landlord agent

/s/ Mackie Barch Tenant

/s/ Mackie Barch Tenant

EXHIBIT 21.1 LIST OF SUBSIDIARIES OF SUNPEAKS VENTURES, INC.

1,000 (7,133) (6,133) 44,488

(The accompanying notes are an integral part of these financial statements) 3

Year ended December 31, 2009 $

From September 19, 2008 (date of inception) to December 31, 2010 $

6,073 452 608 7,133 (7,133)

(The accompanying notes are an integral part of these financial statements) 4

Shares # Balance September 19, 2008 (Date of Inception)

1,000 (7,133) (6,133)

(The accompanying notes are an integral part of these financial statements) 5

Year ended December 31, 2009 $

(43,897) 50,621 (409)

(43,897) 50,621 (409)

1,000 1,000 591 591

Supplemental disclosures: Interest paid Income tax paid