UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

 

FORM 10-Q 

_________________

 

(Mark One)

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

 

For the quarterly period ended June 30, 2013

 

      . TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

 

 

For the transition period from ______ to _______

 

HARBOR ISLAND DEVELOPMENT CORP.

(Exact name of registrant as specified in its charter)

Nevada	000-54618	27-2464185
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification Number)
	2275 NW 150th Street, Unit B Opa Locka, FL 33054  (Address of principal executive offices)
	(305) 688-7494

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X . No      .

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes      . No      . (Not Required)

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

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

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

As of September 10, 2013, there were 310,000,000 shares of the registrant’s $0.001 par value common stock issued and outstanding.

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HARBOR ISLAND DEVELOPMENT CORP.*

TABLE OF CONTENTS 

		Page
PART I.              FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13
ITEM 4.	CONTROLS AND PROCEDURES	14
PART II.            OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	14
ITEM 1A.	RISK FACTORS	14
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	14
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	14
ITEM 4.	MINE SAFETY DISCLOSURES	14
ITEM 5.	OTHER INFORMATION	15
ITEM 6.	EXHIBITS	15

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Harbor Island Development Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Financial Statements

June 30, 2013

Index

Balance Sheets (unaudited)

4

Statements of Operations (unaudited)

5

Statements of Cash Flows (unaudited)

6

Notes to the Financial Statements (unaudited)

7

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Balance Sheets

(Expressed in U.S. dollars)

(unaudited)

	June 30, 2013 $	March 31, 2013 $
ASSETS
Current Assets
Cash	88,162	6,623
Total Assets	88,162	6,623
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	43,764	57,171
Accrued liabilities	2,644	19,420
Due to related parties	2,338	72,500
Notes payable	150,000	82,401
Total Liabilities	198,746	231,492
Stockholders’ Deficit
Preferred stock, 50,000,000 shares authorized, $0.001 par value; nil shares issued and outstanding	–	–
Common stock, 700,000,000 shares authorized, $0.001 par value; 310,000,000 and 450,000,000 shares issued and outstanding, respectively	310,000	450,000
Additional paid-in capital	16,416,594	(407,228)
Deficit accumulated during the development stage	(16,837,178)	(267,641)
Total Stockholders’ Deficit	(110,584)	(224,869)
Total Liabilities and Stockholders’ Deficit	88,162	6,623

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

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Statements of Operations

(Expressed in U.S. dollars)

(unaudited)

	Three months ended June 30, 2013 $	Three months ended June 30, 2012 $	Accumulated from March 19, 2010 (date of inception) to June 30, 2013 $
Revenue	41,127	–	41,127
Cost of sales	24,551	–	24,551
Gross margin	16,576	–	16,576
Operating Expenses
General and administrative	77,611	–	77,611
Impairment of license	16,500,000	–	16,500,000
Management fees	26,000	–	26,000
Professional fees	9,693	–	9,693
Total Operating Expenses	16,613,304	–	16,613,304
Loss from Operations	(16,596,728)	–	(16,596,728)
Other Income (Expense)
Interest expense	(2,644)	–	(2,644)
Gain on settlement of debt	34,500	–	34,500
Total Other Income (Expense)	31,356	–	31,356
Loss from continuing operations	(16,565,372)	–	(16,565,372)
Loss from discontinued operations	(4,165)	(19,804)	(271,806)
Net loss	(16,569,537)	(19,804)	(16,837,178)
Net loss per share, basic and diluted
Continuing operations	(0.04)	(0.00)
Discontinued operations	(0.00)	(0.00)
	(0.04)	(0.00)
Weighted average number of shares outstanding	440,769,231	450,000,000

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

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Statements of Cash Flows

(Expressed in U.S. dollars)

(unaudited)

	Three months ended June 30, 2013 $	Three months ended June 30, 2012 $	Accumulated from March 19, 2010 (Date of Inception) to June 30, 2013 $
Operating Activities
Net loss	(16,569,537)	–	(16,569,537)
Adjustments to reconcile net loss for non-cash items relating to operating activities:
Shares issued for management fees	–	–	–
Impairment loss on license	16,500,000	–	16,500,000
Gain on forgiveness of accounts payable	(34,500)	–	(34,500)
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	23,237	–	23,737
Due to related parties	11,839	–	11,839
Net cash used in operating activities	(68,461)	–	(68,461)
Financing Activities
Proceeds from notes payable	150,000	–	150,000
Proceeds from issuance of common shares	–	–	–
Net cash provided by financing activities	150,000	–	150,000
Increase (decrease) in cash from continuing operations	81,539	–	81,539
Discontinued Operations
Net cash provided by (used in) operating activities	–	(7,902)	(113,550)
Net cash provided by financing activities	–	–	120,173
Increase (decrease) in cash from discontinued operations	–	(7,902)	6,623
Increase (decrease) in cash	81,539	(7,902)	88,162
Cash, beginning of period	6,623	12,076	–
Cash, end of period	88,162	4,174	88,162
Non-cash investing and financing activities:
Issuance of shares for acquisition of license	16,500,000	–	16,500,000
Cancellation of common shares	250,000	–	250,000
Forgiveness of related party debt	183,822	–	183,822
Supplemental disclosures:
Interest paid	–	–	–
Income taxes paid	–	–	–

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

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Notes to the Financial Statements

(expressed in U.S. dollars)

(unaudited)

1.

Nature of Operations and Continuance of Business

Harbor Island Development Corp. (the “Company”) was incorporated in the State of Nevada on March 19, 2010. The Company is a Development Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. From March 19, 2010 (date of inception) to April 4, 2013, the Company’s principal business was the retail of beach and island resort apparel.  Commencing on April 5, 2013, the Company’s principal business was marketing and media placement for various companies in various sectors.  The result of the change in business operations resulted in all costs relating to the retail of beach and island resort apparel to be reclassified as discontinued operations.  

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and is unlikely to generate significant revenue or earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at June 30, 2013, the Company has a working capital deficit of $110,584 and accumulated losses totaling $16,837,178 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company currently has recently commenced sales revenues and must rely on the debt and/or equity financing to continue to fund operations. The Company will require significant additional financings in order to pursue exploration of any properties acquired. There is no assurance that the Company will be able to obtain the necessary financings to complete its objectives.

2.

Summary of Significant Accounting Policies

a)

Basis of Presentation

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company’s fiscal year end is March 31.  

b)

Use of Estimates

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 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 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 Company’s 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 maturity of three months or less at the time of issuance to be cash equivalents. As of June 30, 2013 and March 31, 2013, there were no cash equivalents.

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Notes to the Financial Statements

(expressed in U.S. dollars)

(unaudited)

2.

Summary of Significant Accounting Policies (continued)

d)

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required 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 instrument’s 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 Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, amounts due to related parties, and notes payable.  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.

e)

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 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.

f)

Comprehensive Income

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2013, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Notes to the Financial Statements

(expressed in U.S. dollars)

(unaudited)

2.

Summary of Significant Accounting Policies (continued)

g)

Foreign Currency Translation

Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.

h)

Revenue Recognition Policy

The Company derives revenue from marketing services and media placement income.  Revenue is recorded when the price for a product or service is fixed or determinable, an arrangement exists between the company and the customer, and collectability is reasonably assured.  The Company evaluates for impairment of uncollectible receivables periodically throughout the year, and will recognize an impairment if conditions exist that warrant an impairment loss.  

i)

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

j)

Impairment of Long Lived Assets

Long-lived assets are reviewed for impairment in accordance with the applicable FASB standard, "Accounting for the Impairment or Disposal ofLong- lived Assets". Under the standard, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carryingamounts may not be recoverable. An impairment charge is recognized for the amount, if any, which the carrying value of the asset exceeds the fair value.

k)

Recent 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.

3.

Acquisition of License

On April 4, 2013, the Company acquired the rights to software and marketing licenses from a company controlled by the new President and Director of the Company in exchange for 110,000,000 common shares of the Company with a fair value of $16,500,000, based on the end of day trading price for the Company’s common stock on the date of issuance.  Due to related party relationship, the transaction was carried over as having no cost basis.  

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HARBOR ISLAND DEVELOPMENT CORP.

(A Development Stage Company)

Notes to the Financial Statements

(expressed in U.S. dollars)

(unaudited)

4.

Notes Payable

a)

As of March 31, 2013, the Company had an outstanding note payable of $82,401 (2010 - $8,100) and accrued interest of $19,420 (2012 - $1,673) to a non-related party.  During the period ended June 30, 2013, the former President and Director of the Company assumed personal responsibility for the amounts owing as part of his resignation agreement on April 5, 2013.   During the same period, the amount, including principal and accrued interest, was assumed and forgiven by a related party and written off to additional paid-in capital apart of the $183,822 debt forgiveness mentioned in NOTE 6.

b)

During the period ended June 30, 2013, the Company issued a note payable of $100,000 to a non-related party.  Under the terms of the note, the amount is unsecured, bears interest at 10% per annum, and is due on demand.  As at June 30, 2013, accrued interest of $2,384 (March 31, 2013 - $nil) has been recorded in accrued liabilities.

c)

During the period ended June 30, 2013, the Company issued a note payable of $50,000 to a non-related party.  Under the terms of the note, the amount is unsecured, bears interest at 10% per annum, and is due on demand.  As at June 30, 2013, accrued interest of $260 (March 31, 2013 - $nil) has been recorded in accrued liabilities.

d)

During the period ended June 30, 2013, the Company entered discussion with prior attorney to mutually settle of all outstanding debt previously owed.  As a result, the company recognized a gain of $34,000 recorded as other income in the statement of operations.

5.    Common Shares

a)

On April 4, 2013, the Company issued 110,000,000 common shares with a fair value, based on the closing price on date of transaction, of $16,500,000 for the acquisition of software and marketing licenses from a company controlled by the new President and Director of the Company.  

b)

On April 4, 2013, as part of the resignation of the former President and Director of the Company, 250,000,000 common shares of the Company were returned to treasury and cancelled.    

6.

Related Party Transactions

a)

As at March 31, 2013, the Company owes $183,822 (2012 - $57,500) to the former President and Director of the Company for management fees.  The amounts owing are unsecured, non-interest bearing, and due on demand.  As of June 30, 2013, the former President and Director of the Company forgave all amounts outstanding from the Company.  Due to related party transaction, the balance is offset to additional paid-in capital.

b)

During the period ended June 30, 2013, the Company incurred management fees of $30,000 (2012 - $nil) to the President and Director of the Company.  At June 30, 2013, the Company owes $2,338 (March 31, 2013 - $nil) to the President and Director of the Company which is unsecured, non-interest bearing, and due on demand.    

7.

Discontinued Operations

On April 5, 2013, upon acquisition of software and marketing licenses from a company controlled by the President and Director of the Company, the Company ceased its operations as a retailer of beach and island resort apparel and focused its business on marketing and media placement.  The resulting change in business resulted in net loss from discontinued operations ($4,165) and ($19,804) for the quarter ended June 30, 2013 and 2012.

8.

Subsequent Events

As of the date of the financial statements, the Company did not have any material reportable events.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

On April 3, 2013, the Company entered into a license agreement with BrandSeed Inc. (“BrandSeed”), a company incorporated in the state of Virginia, whereby BrandSeed grants the Company a five year license in direct marketing software in exchange for 110,000,000 common shares of the Company.

In addition to the license agreement, the former President and Director of the Company has sold 300,000,000 common shares of the Company to the President and Director of BrandSeed in exchange for $15,000.  Furthermore, the President and Director of BrandSeed became the sole officer and director of the Company upon the resignation of the former President and Director of the Company.

Plan of Operation

The company has concentrated in the first quarter of 2013 building its client relationships, publisher network and direct marketing platform to drive low cost customer acquisition across a number of consumer verticals. The company through its license agreement is now entering the test mode on a series of products/services with future revenues being derived from commissions on lead generation for its clients and services revenues from its fully integrated direct marketing platform build-out for specific clients. The company is well positioned to drive substantial revenue growth at attractive margins via its low cost test platform, its proprietary network of low cost media publishers, its proprietary direct marketing platform capabilities and its attractive performance based pricing model. The company plans to take its successful tests to rollout over the next several months which should produce highly scalable and predictable revenue growth and profit margins.

RESULTS OF OPERATIONS

Working Capital

	June 30,	March 31,
	2013 $	2013 $
Current Assets	88,162	6,623
Current Liabilities	198,746	231,492
Working Capital (Deficit)	(110,584)	(224,869)

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Cash Flows

	Three months ended June 30, 2013 $	Three months ended June 30, 2012 $
Cash Flows from (used in) Operating Activities	(68,461)	-
Cash Flows from (used in) Financing Activities	150,000	-
Cash Flows from (used in) Discontinued Operations	-	(7,902)
Net Increase (decrease) in Cash During Period	81,539	(7,902)

Operating Revenues

During the period ended June 30, 2013, the Company recorded sales revenue of $41,127 and cost of sales of $24,551 relating to marketing and media placement services.  During the period ended June 30, 2012, the Company had $nil revenues and cost of sales as the Company did not commence its current business operations until April 5, 2013.  

Operating Expenses and Net Loss

During the three months ended June 30, 2013, the Company incurred operating expenses of $16,613,304 compared to $nil during the three months ended June 30, 2012.  The increase in operating expenses was attributed to an impairment loss on the acquisition of licenses of $16,500,000 due to doubt of future revenue stream.  In addition, the Company incurred $77,611 of general and administrative costs including consulting fees, and $26,000 of management fees to the President and Director of the Company.

During the three months ended June 30, 2013, the Company incurred a net loss of $16,569,537 compared with a net loss of $19,804 during the three months ended June 30, 2012.  In addition to operating expenses, the Company incurred interest expense of $2,644for interest incurred on notes payable owing to non-related companies which is unsecured, due interest at 10% per annum, and is due on demand.  Net loss per share for the period ended June 30, 2013was $0.05 per share for continuing operations and $nil for discontinued operations compared with $nil for both continuing and discontinued operations during the period ended June 30, 2012.  

During the three months ended June 30, 2013, the company had a gain of $34,500 as a result of a favorable settlement of debt compared to a gain or loss of $nil in other income/loss during the three months ended June 30, 2012.

Liquidity and Capital Resources

As at June 30, 2013, the Company’s cash and total asset balance was $88,162compared to $6,623at March 31, 2013. The increase in total assets were due to proceeds received from the issuance of notes payable totaling $150,000 offset by increases in operating expenditures.  

As at June 30, 2013, the Company had total liabilities of $198,746 compared with $231,492 at March 31, 2013.  The decrease in total liabilities was due to the fact that the former President and Director of the Company assumed responsibility for $82,401 of outstanding notes payable, $19,420 of outstanding accrued interest, and forgave $82,001 of amounts owing, as well as a decrease in accounts payable and accrued liabilities of $30,183.  The decreases were offset by an increase in notes payable of $150,000 for the issuance of two notes payable which are unsecured, bears interest at 10% per annum, and is due on demand.  

As at June 30, 2013, the Company had a working capital deficit of $110,584 compared with a working capital deficit of $224,869 as at March 31, 2013.  The decrease in working capital deficit was attributed to the former President and Director of the Company assuming responsibility for $82,401 of outstanding notes payable and forgiveness of $82,001 of amounts owed.  

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Cashflow from Operating Activities

During the three months ended June 30, 2013, the Company used $68,461of cash for operating activities compared to the use of $nil of cash for operating activities during the three months ended June 30, 2012. The increase in cash used for operating activities is due to the fact that the Company did not have any operations for the current business model in the comparative fiscal year.  

Cashflow from Financing Activities

During the three months ended June 30, 2013, the Company received $150,000 of cash from financing activities from the issuance of notes payable as compared to proceeds of $nil for the three months ended June 30, 2012 since the Company had a different line of business.  

 

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.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 4.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on July 17, 2013, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

1.

Quarterly Issuances:

2.

There were no issuances during the quarter ending June 30, 2013.

2.   Subsequent Issuances:

Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURE

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ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number	Description of Exhibit	Filing
3.01	Articles of Incorporation	Filed with the SEC on May 5, 2010 as part of our Registration Statement on Form S-1.
3.02	Bylaws	Filed with the SEC on May 5, 2010 as part of our Registration Statement on Form S-1.
10.01	Management Agreement between the Company and Donald Ross dated April 26, 2010	Filed with the SEC on May 5, 2010 as part of our Registration Statement on Form S-1.
10.02	Non-Exclusive Distributor Agreement between the Company and Island Stuff USA dated March 12, 2010	Filed with the SEC on May 5, 2010 as part of our Registration Statement on Form S-1.
10.03	Promissory Note issued to Alpha Eagle Development Limited dated April 23, 2010	Filed with the SEC on May 5, 2010 as part of our Registration Statement on Form S-1.
10.04	Promissory Note issued to Steve Ross dated April 23, 2010	Filed with the SEC on May 5, 2010 as part of our Registration Statement on Form S-1.
10.05	Amended Non-Exclusive Distributor Agreement between the Company and Island Stuff USA dated July 27, 2010	Filed with the SEC on July 30, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.06	Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.07	Amended Management Agreement between the Company and Donald Ross dated November 3, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.08	Promissory Note issued to Steve Ross dated November 3, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A
10.09	Promissory Note issued to Steve Ross dated November 3, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.10	Promissory Note issued to Steve Ross dated November 3, 2010	Filed with the SEC on November 4, 2010 as part of our Amended Registration Statement on Form S-1/A.
10.11	Amended Promissory Note issued to Steve Ross dated November 3, 2010	Filed with the SEC on November 30, 2010 as part of our Amended Registration Statement on Form S-1/A.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HARBOR ISLAND DEVELOPMENT CORP.

Dated:  September 13, 2013

/s/Chuck Anton

By: Chuck Anton

Its: President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:

Dated:  September 13, 2013

/s/Chuck Anton

By: Chuck Anton

It’s Director

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