Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - Guskin Gold Corp. | Financial_Report.xls |
| EX-4.1 - PROMISSORY NOTE - Guskin Gold Corp. | f10q1211ex4i_inspiredbld.htm |
| EX-31.1 - SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER. - Guskin Gold Corp. | f10q1211ex31_inspiredbld.htm |
| EX-32.1 - SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER. - Guskin Gold Corp. | f10q1211ex32_inspiredbld.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2011
OR
o 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 333-171636
INSPIRED BUILDERS, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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27-1989147
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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233 Wilshire Boulevard, Suite 830
Santa Monica, California
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90401
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code (310) 526-8400
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 x No o
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.
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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x
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes oNo x
As of December 31, 2011, there were 11,025,000 shares of Common Stock, par value $0.001 per share, outstanding.
Item 1. Financial Statements.
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INSPIRED BUILDER, INC
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CONDENSED BALANCE SHEETS
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(UNAUDITED)
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ASSETS
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December 30,
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September 30,
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|||||||
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2011
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2011
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CURRENT ASSETS
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(Audited)
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Cash
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$ | 723 | $ | 1,205 | ||||
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TOTAL CURRENT ASSETS
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723 | 1,205 | ||||||
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TOTAL ASSETS
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$ | 723 | $ | 1,205 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES
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Accounts payable
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$ | 53,241 | $ | 48,400 | ||||
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Note payable
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5,000 | 3,000 | ||||||
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TOTAL LIABILITIES
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58,241 | 51,400 | ||||||
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STOCKHOLDERS’ EQUITY
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Preferred Stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding
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- | - | ||||||
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Common stock, $0.001 par value, 50,000,000 shares authorized, 11,025,000 and 11,025,000 shares issued and outstanding, respectively
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$ | 11,025 | $ | 11,025 | ||||
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Additional paid in capital
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9,975 | 9,975 | ||||||
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Accumulated deficit
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(78,518 | ) | (71,195 | ) | ||||
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Total Stockholders’ Equity
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(57,518 | ) | (50,195 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 723 | $ | 1,205 | ||||
See accompanying notes to financial statements
-1-
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CONDENSED STATEMENTS OF OPERATIONS
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(UNAUDITED)
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For the Three
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For the Three
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Months Ended
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Months Ended
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December 31, 2011
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December 31, 2010
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Construction revenue
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$ | - | $ | 8,489 | ||||
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Cost of materials and labor
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- | 3,437 | ||||||
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Gross margin
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- | 5,052 | ||||||
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OPERATING EXPENSES
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Professional fees
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6,656 | 5,250 | ||||||
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General and administrative
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111 | 5,735 | ||||||
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Total Operating Expenses
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6,767 | 10,985 | ||||||
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LOSS BEFORE PROVISION FOR INCOME TAXES
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(6,767 | ) | (5,933 | ) | ||||
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Other expenses
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Interest expense
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100 | - | ||||||
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Provision for Income Taxes
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456 | - | ||||||
| 556 | ||||||||
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NET LOSS
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$ | (7,323 | ) | $ | (5,933 | ) | ||
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Net loss per share - basic and diluted
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$ | - | $ | - | ||||
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Weighted average number of shares outstanding during the period - basic and diluted
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10,025,000 | 10,553,261 | ||||||
See accompanying notes to financial statements
-2-
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CONDENSED STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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For the three months
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For the three months
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Ended
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Ended
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December 31, 2011
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December 31, 2010
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (7,323 | ) | $ | (5,933 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Stock issued for services
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- | 1,250 | ||||||
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Changes in operating assets and liabilities:
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Increase in accounts payable and accrued expenses
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4,841 | 230 | ||||||
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Net Cash Used In Operating Activities
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(2,482 | ) | (4,453 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from notes payable
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2,000 | |||||||
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Proceeds from the issuance of common stock
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- | 5,500 | ||||||
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Net Cash Provided By Financing Activities
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2,000 | 5,500 | ||||||
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NET INCREASE IN CASH
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(482 | ) | 1,047 | |||||
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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1,205 | - | ||||||
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 723 | $ | 1,047 | ||||
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Supplemental disclosure of non cash investing & financing activities:
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Cash paid for income taxes
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$ | - | $ | - | ||||
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Cash paid for interest expense
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$ | - | $ | - | ||||
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Common stock issued for subscription receivable
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$ | - | $ | - | ||||
See accompanying notes to financial statements
-3-
1 Basis of Presentation
The accompanying unaudited condensed financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the three months ended December 31, 2011 are not necessarily indicative of results that may be expected for the year ending September 30, 2012. The condensed financial statements are presented on the accrual basis.
2. Nature of Operations
Inspired Builders, Inc. (the “Company”) was incorporated in the State of Nevada in February 2010. The Company is a construction company that specializes in residential home repair and home improvements. The Company contracts with homeowners to build custom home improvements, including shelving for closets, bathroom remodeling, upgrading home entertainment centers and replacing flooring.
In connection with the Change of Control that occurred on January 13, 2012, our principal offices are located in Santa Monica, California.
3. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following; estimates of the probability and potential magnitude of contingent liabilities and the valuation allowance for deferred tax assets due to continuing operating losses.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.
Cash
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2011 and September 30, 2011.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.
Fair Value of Financial Instruments
For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of cash, loan payable, and accounts payable and accrued expenses reported in the balance sheets are estimated by management to approximate fair value at December 31, 2011 and September 30, 2011.
Revenue Recognition
The Company records revenue for services rendered when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product/service is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured.
-4-
Income Taxes
The Company accounts for income taxes in accordance with generally accepted accounting principles which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between financial statement and income tax bases of assets and liabilities that will result in taxable income or deductible expenses in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period adjusted for the change during the period in deferred tax assets and liabilities.
The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (FASB) ASC 740, Income Taxes . Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2011 and September 30, 2011, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. All tax returns from fiscal years 2008 to 2011 are subject to IRS audit.
Earnings per share
In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company did not have any potential common stock equivalents at December 31, 2011 and 2010.
Recent accounting pronouncements
ASU No. 2011-02; A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring (“TDR”). In April, 2011, the FASB issued ASU No. 2011-02, intended to provide additional guidance to assist creditors in determining whether a restructuring of a receivable meets the criteria to be considered a troubled debt restructuring. The amendments in this ASU are effective for the first interim or annual period beginning on or after June 15, 2011, and are to be applied retrospectively to the beginning of the annual period of adoption. As a result of applying these amendments, an entity may identify receivables that are newly considered impaired. Early adoption is permitted. The Company intends to adopt the methodologies prescribed by this ASU by the date required, and is continuing to evaluate the impact of adoption of this ASU.
ASU No. 2011-03; Reconsideration of Effective Control for Repurchase Agreements. In April, 2011, the FASB issued ASU No. 2011-03. The amendments in this ASU remove from the assessment of effective control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee. The amendments in this ASU also eliminate the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.
-5-
The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.
ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. In May, 2011, the FASB issued ASU No. 2011-04. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.
The Company will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.
ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income. In June, 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.
The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. Due to the recency of this pronouncement, the Company is evaluating its timing of adoption of ASU 2011-05, but will adopt the ASU retrospectively by the due date.
4. Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $7,323 and net cash used in operations of $2,482 for the three months ended December 31, 2011. In addition, the Company has not had construction revenues since May 2011 and the only prospect for positive cash flow is through the issuance of common stock or debt.
-6-
The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets and from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. There is no plan or knowledge of any tangible financing source or discussions with any investors to raise additional capital. If the Company does not begin to generate sufficient revenue or raise additional funds through a financing, the Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. The Company will require additional funding to finance the growth of its future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
5. Note Payable
On January 10, 2011 the Company borrowed $3,000 pursuant to a note payable. The loan is payable one year from the date of issuance and accrues interest at a rate of 10% per annum. Accrued interest at September 30, 2011 amounted to $292.
On November 16, 2011 the Company borrowed $2,000 pursuant to a note payable. The loan is payable one year from the date of issuance and accrues interest at a rate of 10% per annum. Accrued interest at December 31, 2011 amounted to $25.
6. Stockholders’ Equity
On February 24, 2010 (inception), the Company issued 10,000,000 shares of common stock to the founder ($0.001/share). The Company expensed the $10,000 immediately.
During fiscal year 2010, the Company issued 250,000 shares of common stock for proceeds of $2,500 ($0.01/share).
During fiscal year 2011, the Company issued 650,000 shares of common stock for proceeds of $6,500 ($0.01/share).
During fiscal year 2011, the Company issued 125,000 shares of common stock to consultants for services rendered valued at $1,250 ($0.01/share).
7. Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.
-7-
8. Concentration of Credit Risk
The Company relies heavily on the support of its president and majority shareholder. A withdrawal of this support, for any reason, will have a material adverse affect on the Company’s financial position and its operations.
9. Related Party Transaction
None.
10. Subsequent Events
On January 13, 2012, our principal officer and director entered into a stock purchase agreement for the sale of his equity securities for a purchase price of $15,000. Pursuant to the stock purchase agreement, the purchasers agreed to assume and satisfy all liabilities and continue to operate the business and our sole officer and director has agreed to resign from all positions effective following the filing of this Annual Report on Form 10-K. Our principal officer and director, however, has agreed to remain on as a consultant following this change of control to assist in the continuing operations.
-8-
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis summarizes the significant factors affecting our condensed consolidated results of operations, financial condition and liquidity position for the three months ended December 31, 2011. These financial statements should be read in conjunction with the financial statements of the Company for the year ended September 30, 2011 and notes thereto contained in the information filed as part of the Company’s Annual report on Form 10-K, which was filed with the Commission on January 13, 2012. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Forward-Looking Statements
Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission (“SEC”).
In some cases, you can identify forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential,’’ or ‘‘continue’’ or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Report.
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our 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. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Plan of Operations
Inspired Builders, Inc., a Nevada Corporation, was located in Boston, Massachusetts. On January 13, 2012, pursuant to the change of control transaction previously disclosed in the Company’s filing on Form 10-K dated as of January 13, 2012, we relocated to Santa Monica, California. Until the recent change of control transaction, we focused on repairing and providing home improvements for the homeowners.
Going forward, we expect to redirect the Company’s focus to acquiring, investing in, developing and managing real estate properties and related investments. Any such efforts will require substantial financial and management resources, which the Company does not currently possess. Therefore, while we will seek to acquire these resources as a part of our business plans, there can be no assurance of our success, and therefore, in our ability to enter the real estate investment or any other market.
-9-
Limited Operating History
We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital and management resources and the risks inherent in making and managing real estate and related investments, among other business risks..
As of August 1, 2011, we limited our operations due to financial constraints of our sole officer and director at that time, Brendan Powderly. Mr. Powderly ceased operating this Company on a full-time basis but continued to operate the business on a part-time basis for a period. On January 13, 2012, we entered into a Securities Purchase Agreement that resulted in a change of control and a new management team assuming responsibilities for the Company.
Results of Operations for the First Quarter of Fiscal Years 2012 and 2011
The following table presents the statement of operations for the three month period ended December 31, 2011 and December 31, 2010. The discussion following the table is based on these results.
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For the Three
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For the Three
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Months Ended
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Months Ended
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December 31, 2011
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December 31, 2010
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Construction revenue
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$ | - | $ | 8,489 | ||||
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Cost of materials and labor
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- | 3,437 | ||||||
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Gross margin
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- | 5,052 | ||||||
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OPERATING EXPENSES
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Professional fees
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6,656 | 5,250 | ||||||
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General and administrative
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111 | 5,735 | ||||||
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Total Operating Expenses
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6,767 | 10,985 | ||||||
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LOSS BEFORE PROVISION FOR INCOME TAXES
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(6,767 | ) | (5,933 | ) | ||||
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Other expenses
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Interest expense
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100 | - | ||||||
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Provision for Income Taxes
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456 | - | ||||||
| 556 | ||||||||
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NET LOSS
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$ | (7,323 | ) | $ | (5,933 | ) | ||
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Net loss per share - basic and diluted
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$ | - | $ | - | ||||
-10-
Construction Revenue
Revenue decreased from $8,489 for the three months ended December 31, 2010 to $0 for the three months ended December 31, 2011, a decrease of $8,489.
The decrease in revenue is primarily attributable to the decrease in business and operations resulting from the Company’s sole officer and director withdrawing his full-time attention to the Company’s business.
Operating Expenses
Our total operating expenses decreased from $10,985 for the three months ended December 31, 2010 to $6,767 for the three months ended December 31, 2011, a decrease of $4,218.
The decrease in operating expenses is primarily attributable to the decrease in business and operations that were generated by the Company’s sole officer and director.
Net Income (Loss)
Net loss increased to a net loss of $(7,323) for the three months ended December 31, 2011 from a net loss of $(5,933) for the three months ended December 31, 2010, an increased net loss of $(1,390).
The increase in net loss was primarily due to the decrease in operations. Without generating revenue through the completion of home improvement projects, we were not able to offset expenses.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. We have been funding our operations though the sale of our common stock.
Our primary uses of cash have been for costs of goods for the completion of our home remodeling projects and for the payment of professional legal, accounting and audit fees related to the Company’s public reporting requirements. All funds received have been expended in the furtherance of operating the business and establishing our brand and making sure our projects are completed with efficiency and of the highest quality. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
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▪
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An increase in working capital requirements to finance any new operations,
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Increases in expenses associated with continuing operations, hiring managers, or contracting with vendors, and
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The cost of being a public company.
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Our net revenues are not sufficient to fund our operating expenses. At December 31, 2011, we had a cash balance of $723. Since inception, we raised $6,500 from the sale of common stock to fund our operating expenses, pay our obligations, and grow our company. We will be required to raise additional funds in order to continue operations. We estimate that based on current plans and assumptions, that our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. Other than working capital, we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We will need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate that our existing business will be profitable in 2012. Therefore our future operations will be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.
-11-
We have had to limit our operations further due to our sole officer and director withdrawing his full-time attention to the Company’s business. Mr. Powderly has ceased operating this Company on a full-time basis.
Over the next twelve months, we hope to create a new business plan with a new management team and additional capital resources. But, without additional capital and a new management team, we believe that we may not be able to continue to pursue our business operations. As a result of the foregoing, we will focus the Company’s efforts towards these objectives.
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.
Critical Accounting Policies and Estimates
We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.
Revenue recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance with ASC 605-45 “Principal Agent Considerations”, we recognize revenue net of amounts retained by third party entities pursuant to revenue sharing agreements. Our specific revenue recognition policies are as follows:
We recognize revenue from the acceptance of a home remodeling contract and the signing of the contract when the project is completed and collection is reasonably assured.
Stock-based compensation
We account for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. There were no options outstanding as of September 30, 2010. We account for non-employee share-based awards in accordance with ASC Topic 505-50.
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the interim and annual reporting period beginning January 1, 2011. We will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on our financial statements.
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In August 2010, the FASB issued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet. The proposed exposure draft states that lessees and lessors should apply a “right-of-use model” in accounting for all leases. Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term. The lease term is defined as the longest possible term that is “more likely than not” to occur. The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset. A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease. Comments on this exposure draft were due by December 15, 2010 and the final standard is expected to be issued in the second quarter of 2011. The Company believes that the proposed standard, as currently drafted, will have neither a material impact on its reported financial position and reported results of operations, nor a material impact on the liquidity of the Company.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not required for smaller reporting companies.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls
We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective, as of the three months ended December 31, 2011, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.
During the assessment of the effectiveness of internal control over financial reporting as of December 31, 2011, our management identified material weaknesses due to the fact that we only have 1 officer and director and the lack of requisite U.S. generally accepted accounting principles (GAAP) expertise of our Chief Financial Officer and our internal bookkeeper. One officer and director and a lack of expertise to prepare our financial statements in accordance with U.S. GAAP constitutes a material weakness in our internal control over financial reporting. In order to mitigate the material weakness, we are searching for additional members to sit on our Board of Directors and be appointed as Officers of our Company. We may also engage an outside accounting firm to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity to U.S. GAAP. We believe that appointing additional members to the Board of Directors and hiring additional officers will allow us to improve our internal control over financial reporting. Also, if we decide to engage a U.S. GAAP consultant it will increase the possibility that a material misstatement of our annual or interim financial statements will not occur, and we will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate. Until such time as we add members to our Board of Directors, hire additional officers and/or hire the proper internal accounting staff with the requisite U.S. GAAP experience, however, it is unlikely we will be able to remediate the material weakness in our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our system of internal controls over financial reporting during the three months ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There were no reportable events under this Item 3 during the quarterly period ended June 30, 2011.
ITEM 4. (REMOVED AND RESERVED).
ITEM 5. OTHER INFORMATION.
In connection with the change of control that occurred on January 13, 2012, we issued a promissory note to a related party in the amount of $211,000. The funds obtained from the promissory note were used in connection with the change of control to pay certain obligations and liabilities of the Company at the time of the change of control.
On February 13, 2011, Jason Swuan, our Chief Executive Officer and Director tendered his resignation due to personal commitments requiring his attention. We expect to, but to date, have not appointed a new Chief Executive Officer. Carlos Salas is our acting Chief Executive Officer and sole officer and director. In the future, we intend to appoint a new Chief Executive Officer and place additional individuals on the Board of Directors.
ITEM 6. EXHIBITS.
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Exhibit No.
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Description
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| 4.1 | Promissory Note dated January 13, 2012 |
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31.1
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Section 302 Certification of Chief Executive Officer.
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32.1
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Section 906 Certification of Chief Executive Officer.
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| 101.INC |
XBRL Instance Document
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| 101.SCH |
XBRL Taxonomy Extension Schema Document
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| 101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document
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| 101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document
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| 101.LAB |
XBRL Taxonomy Extension Labels Linkbase Document
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| 101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document
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*
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In accordance with SEC Release 33-8238, exhibit 32.1 is being furnished and not filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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INSPIRED BUILDERS, INC.
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Date: February 14, 2012
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By:
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/s/ Carlos Salas
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Carlos Salas,
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Acting Chief Executive Officer,
Principal Accounting Officer and Director
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