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Pansoft CO LTD 10-K 2010
dti10k123109.htm
 


 
UNITED STATES>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-K

[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2009
OR
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______ to ______

Commission file number 000-53183

DIAMOND TECHNOLOGIES INC.

Nevada
(State or other jurisdiction of incorporation or organization)

2795 Barton Street, East
Unit 5
Hamilton, Ontario
Canada L8E 2J8>
(Address of Principal Executive Offices, including zip code)

(905) 578-3232
 (Issuer’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to section 12(g) of the Act:
None
Common Stock
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [   ]   No [X]

Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [X]   No [  ]

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 [ X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [   ]

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              
  [   ]   Smaller Reporting Company 
[X]
   
(Do not check if a smaller reporting company)

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of March 16, 2010: $265,725.30
The registrant had 19,871,502 shares of common stock outstanding as of March 16, 2010.
 




 
 

 
 
TABLE OF CONTENTS

PART I
Page
   
Item 1. Business.
3
Item 1A. Risk Factors.
12
Item 1B. Unresolved Staff Comments.
13
Item 2. Properties.
13
Item 3. Legal Proceedings.
13
Item 4. Submission of Matters to a Vote of Security Holders.
13
   
PART II
 
   
Item 5. Market For Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchase of Equity Securities.
13
Item 6. Selected Financial Data.
14
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
14
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
17
Item 8. Financial Statements and Supplementary Data.
18
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
30
Item 9A. Controls and Procedures.
31
Item 9B. Other Information.
32
   
PART III
 
   
Item 10. Directors, Executive Officers and Corporate Governance.
32
Item 11. Executive Compensation.
35
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
38
Item 13. Certain Relationships and Related Transactions, and Director Independence.
39
Item 14. Principal Accountant Fees and Services.
40
   
PART IV
 
   
Item 15. Exhibits and Financial Statement Schedules.
41


 
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PART I
 
 ITEM 1.  BUSINESS.
 
Diamond Technologies Inc. was incorporated in the state of Nevada on December 12, 2006 to engage in the business of selling printing equipment, media, display stands and consumables such as inks (dye, uv, solvent) ink cartridges.

On December 11, 2009, we entered into an agreement with Rophe Medical Technologies Inc. and its shareholders (collectively “Rophe”) wherein we acquired all of the issued and outstanding shares of common stock of Rophe in exchange for 3,000,000 restricted shares of our common stock and $1,200,000.

On or about December 11, 2009, we changed our business focus from selling printing equipment to manufacturing and developing software designed to taking medical information from many sources and depositing it into a single source as an electronic medical record for each patient.

Our Technology
 
      We own copyrighted proprietary technologies which allow us to accumulate and store medical information from various parts of the health-care system into a single source to be stored as an Electronic Medical Record (EMR) for each patient.   This allows us to bring together data from pharmaceutical, diagnostic and laboratory systems into one place and provides real-time access of a person’s medical information to doctors at the point of care [patient bedside / doctors office] which helps improve patient care and lowers the cost of medical services.
 
Our Current Product
 
The EMR integration software (EMR) is our premier product. We intend to provide third-party health-care systems (i.e. clinical, laboratory, hospital, etc.) along with software that helps integrate and make the data  from those systems available as an electronic medical record at point of service , i.e. doctors office/hospital bed/rural clinic via the internet , on a doctor’s PDA or mobile phone.
 
This helps reduce the amount of paperwork needed to maintain patient records, reduce errors in medication caused by inconsistent files and speed up the feedback loop for test results and make those available to caregivers very quickly, The goal is reduction in patient wait time for medical services, avoidance of repeat of unnecessary testing due to delayed or missing files, resulting in quicker and better medical care at lower costs to government ministries.
 
As of the date of this report, we have not sold EMR to any customers and there is no assurance we will ever sell EMR to anyone.
 
 Our Products in Development>
 
In addition to EMR, our product portfolio also includes three earlier stage products listed below, all of which highlight the broad applicability of our proprietary technologies to a diverse range of potential future products. We plan to evaluate partnership opportunities for further development and commercialization of these products.
 
 
-3-

 
1 - C&ID-IMS is an internet solution for monitoring and managing Communicable and Infectious Disease information.
 
Our target markets are Health Organizations and Ministries of Health, hospitals and Center for Disease Control (CDC) & the World Health Organization (WHO) members around the globe.

2 - CCG is our clinical-care globalization technology. This product is an effective way to capitalize on the growing “medical tourism phenomenon ” - patients going to low-cost countries for elective medical procedures –, a fast-growing worldwide, multibillion-dollar industry actively promoted by countries such as Cuba, Costa Rica, Hungary, India, Israel, Jordan, Lithuania, Malaysia and Thailand. Belgium, Poland and Singapore and South Africa.

CCG can be used by both the destination and home country to maintain complete and accurate records of the treatment history, avoiding errors due to incomplete patient data and lessening the burden and expense of corrective action on the home country when medical tourists return home.

3 - MC-Telehealth is our mobile clinic long distance or tele-health technology. Our product enables the remote transmission of standardized formats of data for laboratory information, diagnostic imaging, diagnosis and clinical notes.
 
As of the date of this report, we have not sold any of our product in development to any customers and there is no assurance we will ever sell EMR to anyone.
 
Target Market
 
      Our target market for EMR is the Canadian health-care system including Walk-In Clinics/Physicians Offices, Independent Diagnostic Centers, Impendent Health Facilities, Laboratories, and Hospitals. Both the US and Canadian governments are moving towards requiring EMR records with the Canadian system at a more advanced stage of acceptance. Incentives for purchase are provided in Canada where this spending qualifies for assistance from the 2009/2010 Federal Budget as part of Canada’s economic stimulus program.
 
Field of Operations and Corporate Mission
 
             We are a medical information company that uses technology to assist physicians and nurses to streamline the mass of patient information in a coherent and usable manner. Our clinical information systems are designed for use in hospitals, healthcare delivery organizations and regional and national healthcare authorities. Our corporate mission is to help healthcare professionals practice the best possible medicine, at the point of care.
 
             We intend to market leading-edge technology solutions for healthcare institutions and authorities. These solutions are designed to save cost, time and reduce adverse drug events (ADE) that kill more than 200,000 patients per year in the United States alone. Our latest generation suite of software modules comprises a fully functional clinical information system (Clinical Information System) that includes the complete electronic medical record (Electronic Medical Record), with a core Computerized Physician Order Entry (CPOE) module. Our Clinical Information System, Electronic Medical Record and CPOE work together to reduce the cost of providing medical care, while dramatically improving the quality and efficiency of healthcare services offered by healthcare institutions.
 
 
 
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The EMR
 
             The EMR is a group of software modules that constitute a comprehensive, state of the art, fully functional Clinical Information System. EMR is an informatics tool that enables the physician to make informed diagnostic and therapeutic decisions at the point of care. The system communicates with existing legacy systems including Admissions (ADT), pharmacy, laboratory, radiology and Picture Archival and Communication Systems (PACS) through Health Language 7 (HL-7) interfaces. Through its interfaces, EMR captures all clinical information available on every hospitalized patient at any given moment, representing the totality of data required by the hospital clinical staff to perform their duties. Healthcare personnel are able to access information culled from a variety of different sources through this single software solution. The EMR has the following functionality:
 
 
Ÿ
 
Electronic Medical Record. Our Electronic Medical Record system replaces paper-based activities by doctors and nurses. All patient care is prescribed and documented in an electronic media that may include wireless devices with remote access via an Internet portal. All of a patient’s medical history is securely stored in a central database for easy access by the attending healthcare professionals. The information is accessed through a series of computer workstations placed in every ward, within easy reach of the doctors and nurses responsible for those patients.
       
 
Ÿ
 
CPOE.  The CPOE module is a method of giving patient prescriptions and other medical orders in an electronic mode. This form of automation of medical acts has many advantages, such as, the speedy transmission of orders through the hospital, and the elimination of errors due to illegible handwriting. As a result, a CPOE module is believed to contribute to better patient safety. Furthermore, a CPOE module combined with decision support information would contribute to eliminating many common medical errors that occur on a daily basis, such as dosage errors and harmful drug interactions.
       
 
Ÿ
 
Clinical Decision Support. EMR decision support helps the physician validate his therapeutic decisions in real time while prescribing medication. This activity is supported by an extensive knowledge base containing thousands of user cases and thousands of decisional algorithms with up to 30 levels of decision support.
       
 
Ÿ
 
ADE Prevention. We believe our EMR helps prevent ADE’s which often cause prolonged hospitalization and death. In addition, we believe our system helps reduce medication side-effects and avoid duplication of prescriptions, lab tests and radiology exams by bringing important clinical information to the attention of the physician in real time at the point of care. Through our system, the availability of medical charts is immediate, and can be securely encrypted and transmitted worldwide via the Internet.
       
 
Ÿ
 
Medical Audits. The implementation of the EMR in a hospital setting allows for audit of medical procedures and their outcomes. The medical audit mechanism also assures that appropriate regulatory standards are being met. The use of biometric electronic signature provides data security at the highest level.
 
 
-5-

 
             EMR Modules
 
             EMR modules come in four broad classes – administrative/support, nursing, clinical, and the Electronic Medical Record.
 
 
Ÿ
 
Administrative module. EMRADMIN is the principal administrative module. It allows users with the appropriate security rights to access screens that may be used to define and modify the basic architectural structure that defines the business rules for the CPOE for the six general order entry types – drugs, labs, IV solutions, image tests, nursing orders, and dressings – as well as special order entry types, such as sliding scales, drug tapers and transfusions. EMRADMIN creates and modifies decision support algorithms that are called at multiple levels in the order entry sequence and operate as background processes and maintains the ward/bed configuration of the institution of a set of diagnoses, a custom set of system requisitions that may be required by the healthcare institution, a set of system user groups and user group rights and a set of system parameters that are used to determine the system configuration. We supply all of the content required for full function of the system at the time of installation. Our customers may modify any of the content at any time in plain language. EMRADMIN is a required module in the setting of a minimal EMR installation.
       
 
 
Nursing module. The EMR nursing module (EMRNURSE) integrates all physician/nursing clinical functions at the order entry and clinical data entry levels. EMRNURSE contains a medication administration record that is automatically generated by the EMR according to a rules engine, which translates the physician’s prescription into the date-times for prescription administration. System rules are supplied by EMR at the time of installation and may vary for each individual clinical module. EMRNURSE also contains a plan of care and screen sets that allow for the recording and display of clinical information, including vital signs, glucometer-insulin record, input and output, and pain scale. Additional screens exist for the recording of the nursing history. The healthcare institution’s system administrator, through EMRADMIN, manages the basic structure of EMRNURSE. All of our clinical modules access EMRNURSE. EMRNURSE is a required module in the setting of a minimal EMR installation.

 
Ÿ
 
Clinical module. The EMR clinical modules broadly correspond to the individual clinical specialty of medicine of the healthcare institution or a particular division or ward of the institution, such as EMRER, EMRSurgeon, EMRPediatrics and EMRICU. All of the patients in a particular ward may be linked to a single module or patients in a given ward may each be attached to different modules in accordance with the patient’s ailment. Each clinical module may have its own set of available drug listings, its own table of order sets and unique decision support algorithms. The look and feel of each clinical module is constant, though modules may contain unique screens, which may not be available elsewhere in the EMR Clinical Information System. For example, EMRER uses unique patient tracking screens; EMRICU, CCU, and ER contain unique results reporting screens. The health care institution’s system administrator, through EMRADMIN, manages the seed content of the clinical modules. At least one clinical module is required in the setting of a minimal EMR installation. Our system includes, as an option, a DICOM viewer embedded in the clinical signs and results reporting screens so that PACS images may be viewed directly within the clinical context of the EMR clinical data display screens.
       
 
 
-6-

 
 
Ÿ
 
Electronic Medical Record. All clinical modules come with a complete Electronic Medical Record which can be used by physicians, consultants, nursing staff, and paramedical staff to record their admission and progress notes in a coded, menu-driven or free-text format, depending on the preference of the individual user. Clinicians can access all data related to their patient through the Electronic Medical Record. Clinical data entered into the Electronic Medical Record is available to review for the purposes of quality assurance by the clinical staff, administration and, where law permits, may be consulted by the patient.
          
            Installation and Implementation
 
            Delivery of an EMR to a customer consists of three broad phases: hardware installation, software implementation and training.
 
 
Ÿ
 
Hardware installation. Hardware may be installed by us or the customer’s technical staff according to our specific configuration. The scope of the hardware is determined by the number of beds and wards in the particular healthcare institution, as well as the institution’s physical layout.
       
 
Ÿ
 
Software implementation. Our EMR software is configured based on a healthcare institution’s responses to our implementation questionnaire. The information obtained from the questionnaire is used to create the clinical content and populate the production database. Concurrent with managing and preparing this data, HL7 interfaces to other hospital systems such as Pharmacy, Laboratory, ADT and PACS will be designed, developed and tested by EMR and the system suppliers.
       
 
Ÿ
 
Costs.  Cost of implementation of an EMR can vary between $2 and $20 million depending on the size of the hospital and the nature, and functionality of the selected technology.
       
 
Ÿ
 
Training. Training begins well in advance of the installation. EMR has specific training programs for physicians, nurses and other hospital staff. In large hospitals, a pre-determined number of wards will go-live every two weeks until the entire hospital is in full production. EMR training personnel provide on-site support 24 hours per day until the hospital staff can use the system independently.
       
 
Ÿ
 
Helpdesk. The EMR helpdesk is available to our customers 24 hours per day, seven days per week for technical and functional assistance. EMR has the ability to monitor and update the system from a remote location.
 
 
-7-

 
 Advertising and Brand Recognition
 
            We have not advertised our products in any public forum or media, nor do we plan to do so. We rely on the quality of the EMR, its high rating by industry analysts and the building of a successful implementation track record with our existing customers to attract potential new customers.
 
Intellectual Property and Research and Development
 
            We continue to improve and upgrade our system for better performance and to answer our customers’ specific needs. These development activities are often subcontracted to technical companies that specialize in these fields. All of our research and development work is proprietary to our company. During fiscal 2009, we did not incur any expenses relating to research and development.
 
            We do not have any patents on our system or modules. We rely on trade secrets laws, confidentiality agreements and other contractual commitments to protect our proprietary research and development efforts and intellectual property. These protections may not be adequate to protect our proprietary interests. We cannot assure you that third party competitors will not obtain access of our technical information and exploit it for their own benefit. In such event, we may not have adequate funds available to prosecute actions to protect or to defend our proprietary rights. If our proprietary interests are divulged to the public and we do not have adequate funds to prevent third parties from using these interests for their own use, we may lose our competitive advantage, which may adversely affect our financial condition.
 
Our Industry
 
            Overview
 
            There are over 15,000 hospitals in western countries, including the United States and Canada, and more than 10,000 hospitals in Europe, which make up most of the potential market for EMRs and other products derived from the EMR proprietary technology platform. According to the Leapfrog Group, relatively few American hospitals have experimented with physician-based clinical support order entry. According to the Hospital Information Management Systems Society (HIMSS) 2004 conference, less than 10% of hospitals have some form of CPOE or decision support. Management believes that between 10% to 15% of hospitals will adopt CPOE systems within the next four years.
 

 
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Our target market, Canada’s public health care sector is worth more than $150 billion per year. As an enterprise, it would rank number 10 on the Fortune 500. Canada Health Infoway’s vision, the implementation and use of Electronic Health Records (EHR) records for all Canadians by 2016, is expected to deliver $6 to $7 billion in annual benefits.
 
The benefits of Electronic Health Records implementation as per Canada Health Infoway/Health Canada evaluation is $3.4 Billion per year savings [Inpatient ADE=$1.6 B/yr, Ambulatory ADE = $1.4 B/yr and Post Discharge ADE = $0.4 B/yr]
 
Through Canada’s Economic Action Plan, the federal government plans to invest up to $500 million in Canada Health Infoway. The funding would be used to support the goal of 50 percent of Canadians having an electronic health record by 2010, to speed up implementation of electronic medical record system in physicians’ offices, and to develop electronic systems that connect points of service (e.g., hospitals, pharmacies and community care facilities). Their secure systems would enable authorized health professionals across the country to access patient records quickly and easily
 
The Healthcare Information Technology Industry – Recent Developments
                
      Modern hospitals are under increasing pressure to address mounting evidence of major increases in hospital death due to medical errors and ADE’s. According to the March 2000 report, “To Err is Human”, released by the Washington-based Institute of Medicine, up to 100,000 Americans die each year from adverse drug reactions, half of which it considered preventable. Since 2000, evaluations of deaths from ADE’s have been as high as 200,000 in the United States, 85,000 in England, and 23,000 in Canada.
 
            Medical literature and recent publications from the HIMSS indicate that the introduction of Electronic Medical Record technology that would replace paper-based medical records could significantly reduce the incidence of ADE’s and help to contain rising medical costs by increasing the productivity of caregivers.
 
            A coalition of some of America’s largest employers and healthcare purchasers helped to create the Leapfrog Group, a non-profit organization dedicated to promoting information solutions for hospitals. According to the Leapfrog Group, CPOE systems with clinical decision support are deemed to be the core component of an effective clinical information system to replace paper-based records. To date, more than 500 hospitals in the United States have registered with the Leapfrog Group, pledging to move towards the new standards set by the organization for managing healthcare through information technology.
 
            Modernization of the healthcare system is a major part of the national agenda of most western countries.
 
In the US for example,  former House Speaker Newt Gingrich has laid out important markers toward an “intelligent health system for the 21st century.” These include:
 
 
Ÿ
a secure, Web-based networking infrastructure;
     
 
Ÿ
physicians, hospitals and medical personnel using interoperable Electronic Medical Records;
     
 
 
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Ÿ
web-based electronic medical records for every American, beginning with seniors enrolled in Medicare.
     
 
Ÿ
Medicare and financial incentives to encourage doctors to adopt clinical systems and prescribe medication and treatment electronically;
     
 
Ÿ
mandatory use of Electronic Medical Records by physicians during the next 10 years; and
     
 
Ÿ
medical databases, starting with the data of people in federal health programs that can be used for outcomes research, to identify participants for clinical trials, to allow real-time reporting of medication problems and health problems to improve care, and accelerate drug development, approval and recalls.
 
Competition
 
            An overview of EMR/EHR Competition in Canada and their market share of installations (expressed as percentages) as of November 2009 follows Software vendor Practice Solutions Software Inc. with a market share of ½ of 1%, Healthscreen Solutions Inc. with a market share of 1%.96, P&P Data Systems Inc. with a market share of 1%, xwave with a market share of 1%, Nightingale Informatix Corporation with a market share of 0.072, CLINICARE Corporation with a market share of less than 1%, Jonoke Software Developments Inc. with a market share of 1/2%, McMaster University Department of Family Medicine with a market share of 1/3%, York-Med Systems Inc. with a market share of less than 1/2 %, ABELMed Inc. Alpha Global IT Inc., and other minor participants with  negligible (less than 1/3 of 1%)market share.
 
 Distribution of total EMR licenses in Ontario is approximately 3000 and the combined total of all other provinces are 8389 EMR licenses which makes it a total of 17% of Canadian doctors [11389] who are on either full or partial EMR/EHR system. This confirms a market potential of 83% [66,992 EMR/EHR licenses] going forward in 2010 with an estimated market value of $535,936,000
 
In the United States there are several large companies that develop and bring to market other forms of electronic medical record and CPOE systems, such as Cerner Corporation, Eclipsys Corporation, IDX System Corporation, HBOC-McKesson Corporation, Epic Systems Corporation, Medical Information Technology Incorporated, Misys Healthcare Systems, and more recently such global giants as General Electric, Siemens, IBM and Bell.
 
Management believes that integration of our EMR technology will offer customers a far richer integrated medical and clinical content delivered to the doctor at point of care, than any other system in terms of high-priority functionality, EMR is consistently rated among the leaders in all systems of its kind, offering us a significant quality advantage when competing for contracts. In addition, EMR’s Clinical Information System is flexible enough that it can be installed in smaller hospitals that are far less attractive to our major competitors, and tailored to the specific needs and policies of that institution. The EMR also provides a multi-lingual platform which may give us a competitive advantage in the international markets.
 
 

 
-10-

 
 
Due to the relatively lengthy sales cycle involved in the healthcare information technology industry, and the fact that we are significantly smaller and have less financial resources than our competitors, we face an initial disadvantage in the U.S. market. We will have to continue developing new, dynamic and flexible marketing strategies to remain competitive.
 
            The healthcare technology industry is constantly undergoing rapid changes, with major software companies, information technology consulting service providers and system integrators, Internet start-ups, and other software companies having the potential to develop specialized healthcare systems to compete with our product. Management feels our success will hinge upon our ability to continue developing and improving our system in a timely fashion, using the success of existing implementations to build a steady customer base and revenue stream while continuing to offer new product lines that meet the technology needs of the market.
 
            We are also actively developing strategic alliances with partners who offer specialized services within the healthcare industry, such as management consultants, systems integrators, major engineering firms and outsourcing companies.
 
Our Suppliers
 
            We depend on a limited number of third parties to manufacture and supply critical components for our products and services. The infrastructure configuration required to run the EMR application in a hospital setting includes products from Microsoft, Oracle, HP, Stratus, Citrix Systems, Verinex Technologies, Digital Persona, IBM, APC Software, NEC and Veritas Software. If any of these third party manufacturers should cease operations or refuse to sell components to us, we may have to suspend or cease operations. We do not have contracts with our suppliers. Supplier commitments are arranged on a project-by-project basis. If our suppliers do not fulfill their obligations, if they stop manufacturing and supplying components critical for our clinical solutions or if the terms for supply, including price, become commercially unreasonable, we may need to search for alternative sources for components. Our search for additional or alternate suppliers could result in significant delays to our system implementation process, added expense and hinder our ability to maintain or expand our business. Any of these events could require us to take unforeseen actions or devote additional resources to provide our products and services and could harm our ability to compete effectively and adversely affect our financial condition.
 
 
-11-

 
Government Regulation and Legislation
 
            EMR is not required to obtain any governmental approvals to operate in the healthcare technology market. However, the current climate of healthcare information technology legislation requires that companies active in the field be constantly vigilant as new industry norms and standards are tabled and finalized. It is important that governments and healthcare authorities continue to recognize the importance of healthcare reform and the use of information systems, since there rests the impetus for change, hence a healthy, growing market. EMR’s products are fully compliant with industry norms established by HIPAA and federal and industry policy makers concerning functionality, programming language, transaction code set, privacy, security and medical content.
 
In the Canadian context our products would require a preferred vendor status registration based on different provincial regulations which is generally seen as just a routine product and technology registration/endorsement
 
Employees
 
            As of March 16, 2010, we had one full-time employee. We believe that our relationship with our employees and consultants is good.
 
Warranties
 
We do not issue warranties in connection with our services. All of our third-party products are offered with a warranty provided by the supplier of that product.
 
Insurance
 
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us which could cause us to cease operations.

Offices

Our administrative office is located at 2795 Barton Street, East, Unit 5, Hamilton, Ontario, Canada L8E 2J8, our telephone number is (905) 578-3232. We lease this space from Lorranie Salciccioli pursuant to a written lease.  Month to month basis and our monthly rent is $500 inclusive

ITEM 1A. 
RISK FACTORS.
                 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 
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ITEM 1B.
UNRESOLVED STAFF COMMENTS.
                   
      None.

ITEM 2.
PROPERTIES.

None.

ITEM 3.
LEGAL PROCEEDINGS.

We are not presently a party to any litigation.

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

On November 30, 2009, at a special meeting of shareholders, a majority of outstanding common stock voted to change our name from Printing Components Inc. to Diamond Technologies Inc.   On December 1, 2009, we filed amended articles of incorporation with the Nevada Secretary of State reflecting the change of our name. 15,740,002 shares voted in favor the name change; 980,000 shares voted against the name change; and, zero votes abstained.


PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our shares are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol “PCOM”. A summary of trading by quarter for 2009 and 2008 is as follows:
 
 
Fiscal Year
High Bid
Low Bid
 
 
2009
   
   
Fourth Quarter 10-1-09 to 12-31-09
$1.25
$0.25
 
   
Third Quarter 7-1-09 to 9-30-09
$1.50
$0.20
 
   
Second Quarter 4-1-09 to 6-30-09
$0.20
$0.20
 
   
First Quarter 1-1-09 to 3-31-09
$0.25
$0.20
 
           
 
Fiscal Year
High Bid
Low Bid
 
 
2008
   
   
Fourth Quarter 10-1-08 to 12-31-08
$0.50
$0.15
 
   
Third Quarter 7-1-08 to 9-30-08
$0.75
$0.25
 
   
Second Quarter 4-1-08 to 6-30-08
$1.10
$0.20
 
   
First Quarter 1-1-08 to 3-31-08
$4.90
$0.25
 

The foregoing reflects a 3 for 1 stock dividend declared on February 11, 2008.

 
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Dividends

We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent. Dividend policy will be based on our cash resources and needs and it is anticipated that all available cash will be needed for our operations in the foreseeable future.

A stock dividend was declared on February 11, 2008, wherein two additional common shares were issued for each one common share issued and outstanding as at February 25, 2008. We have not declared any other dividends.

Section 15(g) of the Securities Exchange Act of 1934

Our company’s 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 purchaser’s 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 NASD’s 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.

Securities authorized for issuance under equity compensation plans

We have no equity compensation plans and accordingly we have no shares authorized for issuance under an equity compensation plan.

ITEM 6.
SELECTED FINANCIAL DATA.
             
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This section of the report includes a number of forward-looking statements that reflect out current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
 
 
-14-

 
Our auditors have issued a going concern opinion. This means that our auditors believe there is substance doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay out bills. This is because we have not generated substantial revenues and do not anticipate generating on-going revenue until we complete the development of our website and engage suppliers and customers to buy our products.

We have opened our office, purchased furniture and computers, installed phone lines and acquired finished goods for resale. We made no sales in 2009.

Plan of Operation
 
      The following Plan of Operation contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this document.
 
      Our plan and focus during the next twelve months include both selling our existing product as well as developing and possibly selling new products.

Our Sales and Marketing Strategy for existing developed products
 
      As of the date of this report, we have not sold any products, nor do we have any customers.  We hope to initiate operations within the next 90 days.   Our milestones during the next twelve months are:
 
      1 - Developing our sales organization and marketing the third party products along with our software that bring the data from these products into an EMR system in the major metropolitan areas of Canada
 
      2 – Simultaneously with the build-up of our sales organization, we will build a product support team that will provide installation, training and customer support.
 
      3 – Expanding our market from the larger metropolitan areas to the smaller rural and more distant medical facilities.
 
      Within Canada, we will focus on having a direct sales force to market and sell EMR to walk-in clinics/doctor’s offices, Independent Diagnostic Centers /Independent Health Facilities and hospitals.
 
      Outside Canada, we may establish commercial partnerships for all of our product candidates in order to accelerate development and marketing in those countries and further broaden our products’ commercial potential.
 

 
-15-

 
 
Our Development and Commercialization Strategy for new products
 
We intend to initiate sales of our products in our target commercial areas. Our target commercial areas are hospitals, clincs and doctor’s offices .  We expect to focus on marketing our current offering as well as completing product development for our product candidates in order to increase our possibilities for current and future revenue generation.
 
      Our forward-looking plan envisions applying our copyrighted design and technology to develop three additional products,  to bring to market integrated computer systems that address today’s critical health management needs in epidemic control, medical information flow across borders and provision of heath care in rural and remote areas.
 
      In addition to our EMR which is ready for production, we have prioritized the following products for completion of development and are listing them in order of priority.
 
      C&ID-IMS - our Communicable and Infectious Diseases Information Management System technology.
 
CCG  - our Clinical-Care Globalization technology.

MC-Telehealth - our Mobile Clinic or tele-health technology.

We do not at this time have a definitive timetable as to when we will  complete these intense development efforts.
 
            We are considered to be in the development stage, as defined in Statement of Financial Accounting Standards No. 7. We have been in the development stage since our inception. We have had no substantial recurring source of revenue; we have incurred operating losses since inception and at December 31, 2009 had a working capital deficiency of $668,302.
 
      The development and marketing of new medical software technology is capital intensive. We have funded operations to date either through the sale of our common stock or through advances made by our key shareholders.
 
      We have utilized funds obtained to date for organizational purposes and to commence
certain financial transactions. We require additional funding to complete these transactions (including  the purchase of Rophe and related expenses) , expand our marketing and sales efforts   and increasing Diamond’s revenue base.

Limited operating history; need for additional capital

           There is no historical financial information about us upon which to base an evaluation of our performance. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price increases in services and products.

To become profitable and competitive, we have to locate and negotiate agreements with manufacturers to offer their products for sale to us at pricing that will enable us to establish and sell the products to our clientele.

 
-16-

 
 We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand out operations. Equity financing could result in additional dilution to existing shareholders.

Results of operations
 
During the year 2007, we incorporated the company, hired the attorney and the auditor and began to negotiate contracts and sell printing related products.
 
During the year 2008 we continued sourcing products. We did not sell any products or services.

During the year 2009, we did not sell any products or services. Our loss since inception is $ 757,246. We acquired all of the issued and outstanding shares of common stock of Rophe Medical Technologies, Inc.
 
Since inception, we sold 5,000,000 pre-dividend shares of common stock to our officers and directors for $50; issued 490,500 pre-dividend shares of common stock at $0.25 per share for a total of $122,625; and issued 83,334 pre-dividend shares of common stock at $0.60 per share for a total of $50,000.

 
As of the date of this report, we have not generated any  revenues from our business operations.
 
In December 2006, we issued 5,000,000 pre-dividend shares of common stock pursuant to the exemption contained in Reg. S of the Securities Act of 1933. This was accounted for as a sale of common stock.

On June 25, 2007, we completed our public offering of 490,500 shares of pre-dividend common stock at an offering price of $0.25 per share. We raised $122,625.

On December 28, 2007, we sold 83,334 restricted pre-dividend shares of the Company common stock pursuant to the exemption contained in Reg. S of the Securities Act of 1933, as amended at an offering price of $0.60 per share we raised $50,000.

A stock dividend was declared on February 11, 2008, wherein two additional common shares were issued for each one common share issued and outstanding as at February 25, 2008.
 
On December 31, 2009, we acquired 300 shares of common stock of Rophe Medical Technologies Inc. (Rophe”) which constitute all of the issued and outstanding shares of Rophe common stock in exchange for 3,000,000 restricted shares of our common stock.  Rophe thereby became our wholly owned subsidiary corporation.  On March 16, 2010, the Rophe Acquisition payment terms were amended, the company issued additional 3,000,000 of the Company’s common shares in exchange for $200,000 payable on March 31, 2010 and $250,00 payable on April 30, 2010. 

As of December 31, 2009, our total assets were $874,500 in cash, fixed assets and our total liabilities were $671,271 comprised of $ 23,217 in accrued liabilities and $548,054 in accrued officer salaries and other amounts due to officer and shareholders. And $100,000 acquisition of Rophe Medical Technologies Inc.
 
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 
-17-

 
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
            



 






DIAMOND TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2009














 


 

 


 

 
-18-

 




DIAMOND TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
 
INDEX



 
PAGE
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-2
   
CONSOLIDATED BALANCE SHEETS
F-3
   
CONSOLIDATED STATEMENTS OF OPERATIONS
F-4
   
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
F-5
   
CONSOLIDATED STATEMENTS OF CASH FLOWS
F-6
   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7







 

 




F-1

 
-19-

 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors
Diamond Technologies Inc.
Hamilton, Ontario, Canada

We have audited the accompanying balance sheet of Diamond Technologies Inc. (the “Company”), formerly known as Printing Components Inc. (a development stage company),  as of December 31, 2009 and 2008 and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years then ended.  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 audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 audits provide 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 the Company as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended 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. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 

MALONEBAILEY, LLP
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
March 31, 2010
 



F-2


 
-20-

 




DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Balance Sheets
 

   
December 31,
ASSETS
 
2009
 
2008
Current Assets:
       
Cash
$
2,969
$
629
         
Total Current Assets
 
2,969
 
629
         
Copyrights (Note 6)
 
865,000
 
-
Fixed assets, net (Note 5)
 
6,531
 
9,674
         
   TOTAL ASSETS
$
874,500
$
10,303
         
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
       
Current Liabilities:
       
Accrued liabilities-other
$
23,217
$
4,500
Accrued officers' salaries
 
240,000
 
150,000
Acquisition cost payable (Note 6)
 
100,000
 
-
Due to shareholder (Note 4)
 
308,054
 
-
         
   Total Current Liabilities
 
671,271
 
154,500
         
Commitments and contingencies (Note 8)
 
-
 
-
         
Stockholders' Deficiency (Note 2)
       
Preferred stock, $0.00001 par value,
       
none issued and outstanding
 
-
 
-
Common stock, $0.00001 par value, 100,000,000 shares authorized,
       
22,871,502 and 16,721,502 shares issued and outstanding
       
at December 31, 2009 and 2008, respectively.
 
229
 
167
Paid-in-capital
 
960,246
 
172,508
Deficit Accumulated during the Development Stage
 
(757,246)
 
(316,872)
         
Total Stockholders' Equity (Deficiency)
 
203,229
 
(144,197)
         
            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
$
874,500
$
10,303



 
The accompanying notes are an integral part of these financial statements
F-3
 
-21-

 
DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statements of Operations
           
For the Period
   
For the Year
 
For the Year
 
December 12,
   
Ended
 
Ended
 
2006 (inception)
   
December 31,
 
to December 31,
 
to December 31,
   
2009
 
2008
 
2009 (unaudited)
             
Revenue
$
-
$
-
$
15,887
             
Cost of Sales:
           
Inventory – beginning of period
 
-
 
5,245
 
5,245
Purchases
 
-
 
-
 
12,840
Inventory- end of period
 
-
 
-
 
(5,245)
   
-
 
5,245
 
12,840
Gross Profit
 
-
 
(5,245)
 
3,047
             
Expenses
           
Salaries
 
180,000
 
-
 
330,000
Stock compensation
 
7,500
 
-
 
7,500
Professional fees
 
239,578
 
37,912
 
333,402
Travel
 
133
 
-
 
22,850
Rent
 
5,622
 
5,572
 
17,607
Meals and entertainment
 
360
 
-
 
11,506
Bad debts
 
-
 
8,555
 
8,555
Web page design
 
-
 
-
 
8,491
Office
 
3,124
 
2,420
 
7,888
Depreciation
 
3,144
 
3,144
 
5,600
Registration fees
 
598
 
1,375
 
4,298
Bank charges
 
313
 
608
 
1,656
Other
 
2
 
939
 
940
   
440,374
 
60,525
 
760,293
             
Net Loss
$
(440,374)
$
(65,770)
$
(757,246)
             
Basic and diluted net loss per share
$
-
$
-
   
             
Weighted average shares used in calculating
           
Basic and diluted net loss per share
 
16,886,297
 
16,721,502
   


 

The accompanying notes are an integral part of these financial statements
F-4

 
-22-

 

DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the years ended December 31, 2009, 2008, 2007 and the period December 12, 2006 (inception) through December 31, 2006

                                           
                                 
Deficit
       
                                 
Accumulated
       
   
Preferred Stock
   
Common Stock
   
Additional
   
During the
   
Total
 
   
$.00001 par value
   
$.00001 par value
   
Paid-In
   
Development
   
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Deficiency
 
Balance December 12, 2006 (Inception)
    -     $ -       -     $ -     $ -     $ -     $ -  
Sale of common shares
    -       -       15,000,000       1 50       (100 )     -       50  
Net loss
    -       -       -       -       -       (18,500 )     (18,500 )
Balance December 31, 2006 (unaudited)
    -       -       15,000,000       150       (100 )     (18,500 )     (18,450 )
Sale of common shares
    -       -       1,721,502       17       172,608       -       172,625  
Net loss
    -       -       -       -       -       (232,602 )     (232,602 )
Balance December 31, 2007 (Audited)
    -       -       16,721,502       167       172,508       (251,102 )     (78,427 )
Net loss
    -       -       -       -       -       (65,770 )     (65,770 )
Balance December 31, 2008
    -       -       16,721,502       167       172,508       (316,872 )     (144,197 )
Shares issued for Rophe Acquisition
    -       -       6,000,000       60       765,240       -       765,300  
Sale of shares
    -       -       150,000       2       14,998       -       15,000  
Stock compensation
    -       -       -       -       7,500       -       7,500  
Net Loss
    -       -       -       -       -       (440,374 )     (440,374 )
Balance December 31, 2009
    -     $ -       22,871,502     $ 229     $ 960,246     $ (757,246 )   $ 203,229  


 





The accompanying notes are an integral part of these financial statements
F-5

 
-23-

 

DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows


               
For the Period
 
   
For the Year
   
For the Year
   
December 12,
 
   
Ended
   
Ended
   
2006 (inception)
 
   
December 31,
   
December 31,
   
to December 31,
 
   
2009
   
2008
   
2009 (unaudited)
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (440,374 )   $ (65,770 )   $ (757,246 )
Depreciation
    3,144       3,144       7,888  
Stock compensation
    7,500       -       7,500  
Changes in operating assets and liabilities:
                       
Decrease in accounts receivable
    -       8,087       -  
(Increase)/decrease in inventory
    -       5,245       -  
Increase/(decrease) in accrued liabilities
    108,716       (6,212 )     275,504  
NET CASH USED BY OPERATING ACTIVITIES
    (321,014 )     (55,506 )     (466,354 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Asset acquisition
    300               300  
Purchase of fixed assets
    -       -       (14,418 )
CASH USED BY INVESTING ACTIVITIES
    300       -       (14,118 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Shareholders advances (repayments)
    308,054       (31,240 )     187,675  
Proceeds from sales of common stock
    15,000       -       295,766  
CASH PROVIDED BY FINANCING ACTIVITIES
    323,054       (31,240 )     483,441  
                         
NET INCREASE IN CASH
    2,340       (86,746 )     2,969  
                         
CASH
                       
  Beginning of year
    629       87,375       -  
  End of year
  $ 2,969     $ 629     $ 2,969  
                         
SUPPLEMENTAL CASH FLOW INFORMATION:
                       
Income tax paid
  $ -     $ -     $ -  
Interest paid
  $ 313     $ -     $ -  
                         
Supplemental disclosure of non-cash investing activities
                       
Accounts payable as partial consideration for asset acquistion
    100,000                  
Common stock issued as partial consideration for asset acquisition
    765,300     $ -     $ -  


The accompanying notes are an integral part of these financial statements
F-6

 
-24-

 

DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements


NOTE 1 - ACCOUNTING POLICIES AND OPERATIONS

Organization

Diamond Technologies, Inc., formerly, Printing Components, Inc. (the "DTI"), a development stage company, was incorporated in Nevada on December 12, 2006. The Company offers media, inks, printing, and graphic design services to the large format digital printing industry. The Company's fiscal year ends on December 31st.  On December 31, 2009, the DTI closed an agreement with Rophe Medical Technologies Inc. and its shareholders (collectively “Rophe”) wherein the DTI acquired all of the issued and outstanding shares of common stock of Rophe.  As a result of the Rophe transaction, DTI changed its business focus from selling printing equipment to manufacturing and developing software designed to take medical information from many sources and then depositing it into a single source as an electronic medical record for each patient. 

DTI and its subsidiaries – Rophe shall be collectively referred throughout as the “Company”.
 
Basis of Presentation

The Company complies with United States Accounting Principles (“US GAAP”) guidelines to identify the Company as a development stage enterprise.

Basis of Consolidation

The consolidated financial statements include the accounts of  DTI and its wholly owned subsidiary, Rophe Medical Technologies, Inc.. Significant inter-company transactions have been eliminated in consolidation.

Earnings Per Share

The Company computes earnings per share in accordance with accounting standards of Earnings per Share. Under the provision, basic earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially dilutive common shares outstanding during the period. There were no potentially dilutive common shares outstanding during the period.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Depreciation

The cost of computers and furniture is depreciated over the estimated useful life of the related assets from 3 to 7 years.

Copyrights

Copyrights are stated at cost. According to the copyright laws in the United States of America, the life of a copyright is the author’s life plus 70 years, which is determined to be indefinite. The Company will review the value of the copyrights on an annual basis to determine if the value has been impaired.

Impairment of Long-lived Intangible Assets

The Company accounts for impairment of intangible assets in accordance with the accounting standards, which requires the Company to evaluate a long-lived asset for recoverability when there is event or circumstance that indicates the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value. Management reviewed its long-lived intangible assets and has not recorded any impairment related to these assets for fiscal 2009 or 2008.
 
F-7

 
-25-

 
DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements


NOTE 1 - ACCOUNTING POLICIES AND OPERATIONS (continued)

Income Taxes

The Company accounts for income taxes in accordance with accounting standards for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Fair Value of Financial Instruments

Financial assets and liabilities recorded on the accompanying balance sheets are categorized based on the inputs to the valuation techniques as follows:
 
Level 1> - Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives and most United States Government and agency securities).Level 2> - Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:
 
 
Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently);
 
 
Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and
 
 
Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives).
 
Level 3> - Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Availability of observable inputs can vary and is affected by a variety of factors.  The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a nonrecurring basis as of  December 31, 2009 and 2008 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:
 
       
 Year ended
 
 Year Ended
       
 December 31,
 
 December 31,
 Fair Value at:
     
 2009
 
 2008
             
 Level 3
           
 Assets:
           
       Copyright
   
 $
865,000
 $
0
 
Stock-based Compensation
 
The Company accounts for share-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (ASC 718). Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).
 
F-8
 
 
-26-

 

DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements


NOTE 1 - ACCOUNTING POLICIES AND OPERATIONS (continued)

Recent Accounting Pronouncements

The Company does not expect the adoption of recent accounting pronouncements to have a material impact on its financial condition or results of operations.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The amounts of assets and liabilities in the financial statements do not purport to represent realizable or settlement values. However, the Company has incurred an operating loss. Such loss may impair its ability to obtain additional financing.

This factor raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has met its historical working capital requirements from the sale of common shares and loans from an officer/shareholder. In order not to burden the Company, the officer/shareholder has agreed to provide funding to the Company to pay its annual audit fees, filing costs and legal fees as long as the board of directors deems it necessary. However, there can be no assurance that such financial support shall be ongoing or available on terms or conditions acceptable to the Company.

NOTE 2 – STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock

On December 12, 2006, the Company issued 15,000,000 shares of common stock, par value $0.00001 per share, to its initial shareholders in exchange for $50 in cash.  In the year ending December 31, 2007, the Company sold 1,471,502 shares of common stock at $0.083333 per share for total proceeds of $122,625 and 250,000 shares of common stock at $0.20 per share for total proceeds of $50,000.

On December 11, 2009, the Company issued 3,000,000 of the Company’s common shares to acquire 100% of the issued and outstanding shares of Rophe Medical Technologies Inc. ("Rophe"). (See note 6).

On December 30, 2009 the Company sold 150,000 shares of its common stock at $0.10 per share to its President for proceeds of $15,000. Because the sale price was below the last stock sale in the public market of $0.15 per share, the Company considered $7,500 as compensatory and expensed the amount as Stock based  Compensation with a corresponding credit to Paid-in-capital.

On March 16, 2010, the Rophe Acquisition payment terms were amended, the Company issued additional 3,000,000 of the Company’s common shares in exchange for $200,000 payable on March 31, 2010 and $250,000 payable on April 30, 2010. (See note 6)

Stock spit

On February 8, 2008 the Board of Directors approved a three-for-one stock split effective February 25, 2008.  All references in the financial statements and related notes related to the number of shares and per share amounts of the common stock have been retroactively restated to reflect the impact of the February 25, 2008 stock split.

NOTE 3 – RELATED PARTY TRANSACTIONS

A shareholder/officer has provided funding to pay for the initial operating expenses of the Company. The amount of $48,053 was provided to the company in supporting company’s operation for the year ended December 31, 2009.

NOTE 4 – DUE TO SHAREHOLDER

Amounts due to officer/shareholder are non-interest bearing and pay on demand.
F-9


 
-27-

 
DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements


NOTE 5 – FIXED ASSETS

 
   
2009
 
2008
 
           
Furniture
 
8,694
 
8,694
 
Computers
 
5,724
 
5,724
 
           
    Total Fixed assets
 
14,418
 
14,418
 
Less accumulated depreciation
 
(7,887)
 
(4,744)
 
           
Fixed assets - net
$
6,531
$
9,674
 

Depreciation expense for the years ended December 31, 2009 and 2008 was $3,144 and $3,144, respectively.

NOTE 6 – ROPHE ACQUISITION

On December 11, 2009, an agreement was entered into by the Company to acquire 100% of the issued and outstanding shares of Rophe Medical Technologies Inc. ("Rophe") for cash consideration of $1,200,000 and 3,000,000 of the Company’s common shares (the “Rophe Acquisition”). The $1,200,000 is payable as follows: $50,000 within 30 days of the date of the agreement; $200,000 on March 31, 2010; $250,000 on April 30, 2010; $233,333 on launch of Project 1; $233,333 on launch of Project 2; and, $233,333 on launch of Project 3.   This transaction was closed on December 31, 2009.
 
On March16, 2010, the Rophe Acquisition payment terms were amended as follows:
a.  
$50,000 that was due by January 30, 2010 is to be paid $35,000 by March 5, 2010, and $15,000 by March 31, 2010.
b.  
$200,000 that was due on March 31, 2010, and $250,000 that was due on April 30, 2010; of the total of $450,000, $400,000 was converted to 3,000,000 shares of common stock on March 16, 2010 and the remaining balance of $50,000 is payable March 31, 2010.
 
 
The total acquisition price excluding contingent payment of $865,000 was allocated to the Copyrights obtained in the acquisition which was the only asset of Rophe.

NOTE 7 – INCOME TAXES

The components of the Company’s tax provision were as follows:

   
December 31,
 
   
2009
   
2008
 
Current income tax expense (benefit)
  $ (148,000 )   $ (12,000 )
Deferred income tax
    148,000       12,000  
    $ -     $ -  

Deferred income taxes reflect the net income tax effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and amounts used for income taxes.  The Company’s deferred income tax assets and liabilities consist of the following:

   
December 31,
 
   
2009
   
2008
 
Net operating loss carry forward
  $ 243,000     $ 95,000  
Valuation allowance
    (243,000 )     (95,000 )
Net deferred tax asset
  $ -     $ -  

Net operating loss carry forwards totaled approximately $751,000 at December 31, 2009.  The net operating loss carry forwards will begin to expire in the year 2027 if not utilized.  After consideration of all the evidence, both positive and negative, management has recorded a valuation allowance at December 31, 2009 due to uncertainty of realizing the deferred tax assets.

Utilization of the Company’s net operating loss carry forwards may be limited based on changes in ownership as defined in Internal Revenue Code Section 382.
 
F-10

 
-28-

 

DIAMOND TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements


NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company currently rents office space on a month to month basis. Rent expense for the years ended December 31, 2009 and 2008 were $5,622 and $5,572, respectively.

In November 2007, the Company entered into a four year master distribution agreement to distribute digital printing ink and media products in the United States of America.  Beginning in March 2008, the Company is obligated to distribute minimum product units as defined in the contract.  This agreement was cancelled April 4, 2008.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-11

 
-29-

 

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

On October 21, 2009, we terminated Kempisty & Company, Certified Public Accountants, P.C. at 15 Maiden Lane, Suite 1003, New York, New York 10038, as our independent registered public accounting firm.  The decision to dismiss Kempisty & Company, Certified Public Accountants, P.C.   as our independent registered public accounting firm was approved by our Board of Directors on October 21, 2009.   Except as noted in the paragraph immediately below, the reports of Kempisty & Company, Certified Public Accountants, P.C. ’s financial statements for the years ended December 31, 2008 and 2007 and for the period January 1, 2009 through June 30, 2009 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle.

The reports of the Kempisty & Company, Certified Public Accountants, P.C.  on our financial statements as of and for the years ended December 31, 2008 and 2007 and for the period January 1, 2009 through June 30, 2009 contained an explanatory paragraph which noted that there was substantial doubt as to our ability to continue as a going concern as we had suffered negative working capital, had experienced negative cash flows from continuing operating activities and also due to uncertainty with respect to our ability to meet short-term cash requirements.

During the years ended December 31, 2008 and 2007 and for the period January 1, 2009 through June 30, 2009, and through October 26, 2009 we have not had any disagreements with Kempisty & Company, Certified Public Accountants, P.C.  on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to Kempisty & Company, Certified Public Accountants, P.C. ’s satisfaction, would have caused it to make reference to the subject matter of the disagreements in its reports on our consolidated financial statements for such years or in connection with its reports in any subsequent interim period through the date of dismissal.

During the years ended December 31, 2008 and 2007, and through October 26, 2009, there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.

On October 26, 2009, we delivered a copy of this report to Kempisty & Company, Certified Public Accountants, P.C..  Kempisty & Company, Certified Public Accountants, P.C.  issued its response.  The response stated that it agreed with the foregoing disclosure.  A copy of Kempisty & Company, Certified Public Accountants, P.C.’s response was attached to our Form 8-K filed with the SEC on October 27, 2009.

New independent registered public accounting firm

On October 21, 2009, we engaged Malone & Bailey, P.C., 10350 Richmond Avenue, Suite 800, Houston, Texas 77042 an independent registered public accounting firm, as our principal independent accountant with the approval of our board of directors. We have not consulted with Malone & Bailey, P.C. on any accounting issues prior to engaging them as our new auditors.

During the two most recent fiscal years and through the date of engagement, we have not consulted with Malone & Bailey, P.C. regarding either:

 
 
-30-

 

 
1.
The application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us nor oral advice was provided that Malone & Bailey, P.C.  concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or

2.
Any matter that was either subject of disagreement or event, as defined in Item 304(a)(1)(iv)(A) of Regulation S-K and the related instruction to Item 304 of Regulation S-K, or a reportable event, as that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-K.

ITEM 9A.
CONTROLS AND PROCEDURES.
 
Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were not effective as of the end of the period covered by this report due to lack of segregation of duties in financial reporting and presence of adjusting journal entries during the audit.

Management’s Report on Internal Control Over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a -15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of the inherent limitations due to, for example, the potential for human error or circumvention of controls, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
 
-31-

 
Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2009. Material weakness identified included:

*
Lack of segregation of duties
*
Presence of adjusting journal entries identified by the auditors during the audit of the company’s financial statements for the year ended December 31, 2009.

   We have not taken any steps to remedy the foregoing material weaknesses.

Changes in Internal Controls

We have also evaluated our internal controls for financial reporting, and there have been no changes in our internal controls or in other factors that could affect those controls subsequent to the date of their last evaluation.

ITEM 9B.
OTHER INFORMATION
 
None.

PART III

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

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. The board of directors has no nominating, auditing or compensation committees.  It does have an audit committee comprised of the board of directors.

The name, address, age and position of our present officers and directors are set forth below:

Name and Address
Age
Position(s)
Vince Leitao
48
President, Principal Executive Officer,
2795 Barton Street, East
­Unit 5, Hamilton ON L8E 2J8
 
and a Director
 
     
Mary Kricfalusi
47
Secretary and a member of the board of
2795 Barton Street, East
­Unit 5, Hamilton ON L8E 2J8
 
directors
     
Leonard Steinmetz
58
treasurer, principal financial officer, and
2795 Barton Street, East
­Unit 5, Hamilton ON L8E 2J8
 
principal accounting officer and as a member of the board of directors

 
-32-

 


John Cecil
48
Director
2795 Barton Street, East
­Unit 5, Hamilton ON L8E 2J8
   

Samuel Baker
74
Director
2795 Barton Street, East
­Unit 5, Hamilton ON L8E 2J8
   


On October 27, 2009, Vince Leitao was appointed our president, principal executive officer and a director.  Since September 2006, Mr. Leitao has been president of Goapharma Canada, Inc., located in Markham, Ontario, Canada which he founded.  Goapharma Canada Inc. is engaged in the business of producing and marketing specialty dermatology products for psoriasis and eczema.  From May   2004 to August 2006, Mr. Leitao was vice president of sales for Genpharm/Gennium Pharma divisions of E. Merck, Damsdart.   From January 2001 to April 2004, Mr. Leitao was a director – sales for Genpharm and from April 1999 to December 2000, he served as a sales representative with Genpharm.

Since December 12, 2006, Mary Kricfalusi has been our secretary and a member of our board of directors. Since March 2006, Ms. Kricfalusi has been a partner in Suncastle Developments Corporation, an Ontario partnership, located in Burlington, Ontario, Canada. Suncastle Developments is a research and development corporation specializing in developing coatings and paints for the construction and the automotive industry.

            On December 31, 2009, John Cecil was appointed to our board of directors.  Since December 2003 John Cecil has been the president of Rophe Medical Technologies Inc., in Toronto, Canada.  He is responsible for its research and development and the design and copyright of the company’s technology.  From May 2008 to April 2009 Mr. Cecil was the Senior Healthcare Solutions Architect at SUN Microsystems Canada Inc., in Toronto, Canada, a publicly traded company listed on the NASDAQ under the symbol JAVA.  He was responsible for Innovative product positioning by workshops / white board sessions with stakeholders of the customer to increase business value and support sales in revenue growth and design innovative technology solutions.  From April 2007 to May 2008, Mr. Cecil was the Healthcare Director at Satyam Computer Service Ltd., in Toronto, Canada, a publicly traded compay listed on teh NYSE under the symbol SAY.  He managed healthcare consulting practices and services.
 
            On December 31, 2009, Samuel Baker was appointed to our board of directors.  Since October 1997 Samuel R. Baker has been the Senior Lawyer at Baker Law Firm in Toronto, Canada. Since September 2008, Mr. Baker has been the director of Arehada Mining Limited.  Arehada Mining Limited operates a lead/zinc mine in Inner Mongolia, China.  It is a public company traded on the Toronto Stock Exchange, ticker symbol AHD.
 
On December 31, 2009, Leonard Steinmetz was appointed our treasurer, principal financial officer, and principal accounting officer and as a member of the board of directors.  From January 2009 to December 2009 Leonard A Steinmetz was the Director of Risk and Regulatory Consulting for SMCI, Ltd., in New York, New York.  He was responsible for advising banking and capital markets clients on key technologies and issues for their risk and regulatory functions.  From August 2004 to August 2008, Mr. Steinmetz served as a Senior Manager at Deloitte & Touche, LLP, in New York, New York.  He advised clients on Anti-money laundering and Entreaties risk management issues and technologies.

 
-33-

 

The only conflict that we foresee are that our officers and directors devote time to projects that do not involve us.

Involvement in Certain Legal Proceedings

Other than as described in this section, to our knowledge, during the past five years, no present or former director or executive officer of our company: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two yeas before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing; (2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws; (4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in subsequently reversed, suspended or vacate; (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.

Audit Committee and Charter

We have a separately-designated audit committee of the board. Audit committee functions are performed by our board of directors. None of our directors are deemed independent. Three of our directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to our 2007 Form 10-K.

 
-34-

 
Audit Committee Financial Expert

We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as an exhibit to our 2007 Form 10-K.

Disclosure Committee and Committee Charter

We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter is filed as an exhibit to our 2007 Form 10-K.

Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, officers and persons who beneficially owned more than ten percent of the Company’s common stock to file reports of ownership and changes in ownership of common stock.

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company during the fiscal years 2008 and 2007, no officer or director except one director failed to file their Form 3, 4 and 5 on a timely basis.  Mr. Gandhi, our former Treasurer, Principal Financial Officer and Principal Accounting Officer, did not file his Form 3 until March 26, 2009.  On August 12, 2008, Mr. Gandhi purchased 119,700 common shares.  Vince Leitao,  Samuel Baker, and John Cecil all failed to file Form 3s and have not done so as of the date of this report.

ITEM 11. 
EXECUTIVE COMPENSATION.
                     
           The following table sets forth the compensation paid by us during the last three fiscal years for our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named executive officers.

 
-35-

 
 
Summary Compensation Table

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
             
Change in
   
             
Pension
   
             
Value &
   
             
Nonqual-
   
           
Non-Equity
ified
   
           
Incentive
Deferred
All
 
           
Plan
Compen-
Other
 
       
Stock
Option
Compen-
sation
Compen-
 
Name and Principal
 
Salary
Bonus
Awards
Awards
sation
Earnings
sation
Totals
Position [1]
Year
($)
($)
($)
($)
(S)
($)
($)
($)
                   
Vince Leitao
2009
0
30,000
7,500
0
0
0
0
37,500
President
2008
0
0
0
0
0
0
0
0
 
2007
0
0
0
0
0
0
0
0
 
Mary Kricfalusi
2009
0
150,000
0
0
0
0
0
 
150,000
Secretary
2008
0
0
0
0
0
0
0
0
 
2007
60,000
0
0
0
0
0
0
60,000
 
Leonard Steinmetz
2009
0
0
0
0
0
0
0
 
0
Treasurer
2008
0
0
0
0
0
0
0
0
 
2007
0
0
0
0
0
0
0
0
Vinod Gandhi
2009
0
20,000
0
0
0
0
0
20,000
Treasurer
2008
0
0
0
0
0
0
0
0
Resigned (12-31-09)
2007
0
0
0
0
0
0
0
0
                   
Herb Adams
2009
0
150,000
0
0
0
0
0
150,000
President
2008
0
0
0
0
0
0
0
0
Resigned (10/27/09)
2007
60,000
0
0
0
0
0
0
60,000
                   
John Dow
2009
0
0
0
0
0
0
0
0
Treasurer
2008
0
0
0
0
0
0
0
0
Resigned (05/26/08)
2007
30,000
0
0
0
0
0
0
30,000
                   
Laurene Rogers
2009
0
0
0
0
0
0
0
0
Treasurer
2008
0
0
0
0
0
0
0
0
Resigned (07/10/08)
2007
0
0
0
0
0
0
0
0

            The above salaries accrued from 2007 have not been paid as of yet to this date and the above bonuses have been accrued and not paid as of this date.

 
-36-

 
The following table sets forth information with respect to compensation paid by us to our directors during the last completed fiscal year December 31, 2009.

Director Compensation Table
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
         
Change in
   
         
Pension
   
 
Fees
     
Value and
   
 
Earned
   
Non-Equity
Nonqualified
All
 
 
or
   
Incentive
Deferred
Other
 
 
Paid in
Stock
Option
Plan
Compensation
Compen-
 
 
Cash
Awards
Awards
Compensation
Earnings
sation
Total
Name
($)
($)
($)
($)
($)
($)
($)
               
Vince Leitao
0
0
0
0
0
0
0
               
Mary Kricfalusi
0
0
0
0
0
0
0
               
John Cecil
0
0
0
0
0
0
0
               
Samuel Baker
0
0
0
0
0
0
0
               
Vinod Gandhi
Resigned (12-31-09)
0
0
0
0
0
0
0
               
Herb Adams
Resigned (10/27/09)
0
0
0
0
0
0
0
               
All compensation received by our officers and directors has been disclosed.

Option/SAR Grants

There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors


We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

Compensation of Directors

The members of our board of directors are not compensated for their services as directors. The board has not implemented a plan to award options to any directors. There are no contractual arrangements with any member of the board of directors. We have no director's service contracts.


 
-37-

 
Indemnification

Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he/she acted in good faith and in a manner he/she reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he/she is to be indemnified, we must indemnify him/her against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholder listed below has direct ownership of his/her shares and possesses sole voting and dispositive power with respect to the shares.

Name and Address
Beneficial Owner [1]
Number of Shares Owned
Percentage of Ownership
     
Vince Leitao
150,000
0.75%
2795 Barton Street, East
Unit 5, ON L8E 2J8
   

Mary Kricfalusi
6,000,000
30.19%
2795 Barton Street, East
Unit 5, ON L8E 2J8
   
     
Leonard Steinmetz
0
0.00%
2795 Barton Street, East
Unit 5, ON L8E 2J8
   
     
Samuel Baker
600,000
3.02%
2795 Barton Street, East
Unit 5, ON L8E 2J8
   

 
-38-

 
 
John Cecil
2,400,000
12.08%
2795 Barton Street, East
Unit 5, ON L8E 2J8
   
     
All Officers and Directors as A Group (5 persons)
9,150,000
46.04%
     
Herb Adams
5,950,000
29.94%
22 Daffodil Cresent
Ancaster, Ontario
Canada L9K 1A3
(Resigned 10/27/09)
   
     
John Dow
3,000,000
15.10%
261 Penn Drive
Burlington, Ontario
Canada L7N 2B9
(Resigned 7/10/2008)
   

[1]
The persons named above may be deemed to be a "parent" and "promoter" of our company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his/its direct and indirect stock holdings.
 
[2]   Includes 300,000 shares of common stock owned by Carol Baker, the wife of Samuel Baker.

[3]   Includes 1,200,000 shares of common stock owned by Grace Cecil, the wife of John Cecil.
 
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In December 2006, we issued a total of 5,000,000 shares of pre-dividend restricted common stock to Herb Adams, Mary Kricfalusi, and John Dow our officers and directors in consideration of$50. On June 25, 2007, we completed our public offering of 490,500 pre-dividend shares of common stock and raised $122,625. On December 28, 2007, we sold 83,334 pre-dividend restricted shares of our common stock pursuant to the exemption contained in Reg. S of the Securities Act of 1933, as amended at an offering price of $0.60 per share for cash proceeds of $50,000. A stock dividend was declared on February 11, 2008, wherein two additional common shares were issued for each one common share issued and outstanding as at February 25, 2008.

On December 30, 2009 we sold 150,000 restricted shares of common stock at $0.10 per share to our President for proceeds of $15,000.

On December 11, 2009, an agreement was entered into by the Company to acquire 100% of the issued and outstanding shares of Rophe Medical Technologies Inc. ("Rophe") for cash consideration of $1,200,000 and 3,000,000 restricted shares of the Company’s common stock. This transaction was closed December 31, 2009, we issued 3,000,000 restricted shares of our common stock valued at $450,000, $0.15 per share. of these shares 1,200,000 shares went to John Cecil one of our directors, 1,200,000 shares to John’s wife Grace Cecil, 300,000 shares to Samuel Baker one of our directors and 300,000 to Samuel Baker’s  wife Carol Baker .
 
 
-39-

 
ITEM 14.  
PRINCIPAL ACCOUNTING FEES AND SERVICES.
 
(1) Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:

 
2009
$
7,500
 
Malone & Bailey, P.C.
 
2009
$
6,450
 
Kempisty & Company, Certified Public Accountants, P.C.
 
2008
$
10,845
 
Kempisty & Company, Certified Public Accountants, P.C.

(2) Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

 
2009
$
   
Malone & Bailey, P.C.
 
2009
$
   
Kempisty & Company, Certified Public Accountants, P.C.
 
2008
$
-0-
 
Kempisty & Company, Certified Public Accountants, P.C.

(3) Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

 
2009
$
   
Malone & Bailey, P.C.
 
2009
$
   
Kempisty & Company, Certified Public Accountants, P.C.
 
2008
$
-0-
 
Kempisty & Company, Certified Public Accountants, P.C.

(4) All Other Fees

The aggregate fees billed in each of the last two fiscal yeas for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:

 
2009
$
   
Malone & Bailey, P.C.
 
2009
$
   
Kempisty & Company, Certified Public Accountants, P.C.
 
2008
$
-0-
 
Kempisty & Company, Certified Public Accountants, P.C.

(5) Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.

(6) The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was 0%.



 
-40-

 

PART IV

ITEM 15.  
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
   
Incorporated by reference
 
Exhibit
Document Description
Form
Date
Number
Filed herewith
3.1
Articles of Incorporation.
SB-2
03-05-07
3.1
 
           
3.2
Bylaws.
SB-2
03-05-07
3.2
 
           
4.1
Specimen Stock Certificate.
SB-2
03-05-07
4.1
 
           
10.1
Lease Agreement
SB-2
03-05-07
10.1
 
           
10.2
Agreement with Rophe Medical Technologies Inc.
     
X
 
(December 11, 2009)
       
           
10.3 
Amended Agreement with Rophe Medical Technologies Inc.
     
X
  (December 18, 2009)        
           
10.4  Amended Agreement with Rophe Medical Technologies Inc.      
  (March 16, 2010)         
           
14.1
Code of Ethics.
10-K
4-15-08
14.1
 
           
21.1
List of Subsidiary Corporations
     
X
           
31.1
Certification of Principal Executive Officer
     
X
 
pursuant to 15d_15(e), promulgated under the
Securities and Exchange Act of 1934, as amended.
       
           
31.2
Certification of Principal Financial Officer
pursuant to 15d_15(e),promulgated under the
Securities and Exchange Act of 1934, as amended.
      X
           
32.1
Certification pursuant to 18 U.S.C. Section 1350, as
     
X
 
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Chief Executive Officer).
       
           
32.2
Certification pursuant to 18 U.S.C. Section 1350, as 
     
  adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Chief Financial Officer).
       
           
99.1
Audit Committee Charter.
10-K
4-15-08
99.1
 
           
99.2
Disclosure Committee Charter.
10-K
4-15-08
99.2
 




 
-41-

 

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of this Form 10-K and has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 30th day of March, 2010.

 
DIAMOND TECHNOLOGIES INC.
 
 
 
BY:
 
 
BY:
 
VINCE LEITAO
Vince Leitao, President and Principal Executive Officer
 
 
LEONARD STEINMETZ
Leonard Steinmetz, Treasurer, Principal Financial
Officer, Principal Accounting Officer.
 
 
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature
Title
Date
     
VINCE LEITAO
President, Principal Executive Officer, and
March 30, 2010
Vince Leitao
a member of the Board of Directors.
 
     
MARY KRICFALUSI
Secretary and a member of the Board of
March 30, 2010
Mary Kricfalusi
Directors
 
     
LEONARD STEINMETZ
Treasurer, Principal Financial Officer, Principal Accounting Officer and a member of the Board of
March 30, 2010
Leonard Steinmetz
Directors   
     
JOHN CECIL
Member of the Board of Directors
March 30, 2010
John Cecil
   
     
SAMUEL BAKER
Member of the Board of Directors
March 30, 2010
Samuel Baker
   
     
 
 
 
-42-

 
EXHIBIT INDEX

   
Incorporated by reference
 
Exhibit
Document Description
Form
Date
Number
Filed herewith
3.1
Articles of Incorporation.
SB-2
03-05-07
3.1
 
           
3.2
Bylaws.
SB-2
03-05-07
3.2
 
           
4.1
Specimen Stock Certificate.
SB-2
03-05-07
4.1
 
           
10.1
Lease Agreement
SB-2
03-05-07
10.1
 
           
10.2
Agreement with Rophe Medical Technologies Inc.
     
X
 
(December 11, 2009)
       
           
10.3 
Amended Agreement with Rophe Medical Technologies Inc.
     
X
  (December 18, 2009)        
           
10.4  Amended Agreement with Rophe Medical Technologies Inc.      
  (March 16, 2010)         
           
14.1
Code of Ethics.
10-K
4-15-08
14.1
 
           
21.1
List of Subsidiary Corporations
     
X
           
31.1
Certification of Principal Executive Officer
     
X
 
pursuant to 15d_15(e), promulgated under the
Securities and Exchange Act of 1934, as amended.
       
           
31.2
Certification of Principal Financial Officer
pursuant to 15d_15(e),promulgated under the
Securities and Exchange Act of 1934, as amended.
      X
           
32.1
Certification pursuant to 18 U.S.C. Section 1350, as
     
X
 
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Chief Executive Officer).
       
           
32.2
Certification pursuant to 18 U.S.C. Section 1350, as 
     
  adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Chief Financial Officer).
       
           
99.1
Audit Committee Charter.
10-K
4-15-08
99.1
 
           
99.2
Disclosure Committee Charter.
10-K
4-15-08
99.2
 

 
-43-

 


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