SECURITIES AND EXCHANGE COMMISSION
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
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: 000-52936
INFRASTRUCTURE DEVELOPMENTS CORP.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (801) 488-2006
Securities registered under Section 12(b) of the Act: none.
Securities registered under Section 12(g) of the Act: common stock (title of class), $0.001 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o Noþ
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. Yesþ Noo
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).
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. 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. Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No þ
The aggregate market value of the registrant’s common stock, $0.001 par value (the only class of voting stock), held by non-affiliates (779,204,324 shares) was $779,204 based on the average of the bid and ask price ($0.001) for the common stock on April 25, 2016.
At April 25, 2015, the number of shares outstanding of the registrant’s common stock, $0.001 par value, was 970,441,324, and the number of shares outstanding of the registrant’s preferred stock, $0.001 par value, was 0.
TABLE OF CONTENTS
Unresolved Staff Comments
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Item 10. Directors, Executive Officers, and Corporate Governance
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
ITEM 1. BUSINESS
The Company was incorporated in Nevada as “1st Home Buy & Sell Ltd.” on August 10, 2006, to operate as a real estate company. On August 31, 2008, the Company ceased all operations to become a “shell” company as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and sought to identify a suitable business opportunity. On March 1, 2010, while evaluating possible business combinations, acquisitions or development opportunities, the Company changed its name from “1st Home Buy & Sell Ltd.” to “Infrastructure Developments Corp.”
On April 7, 2010 the Company signed a share exchange agreement to acquire Intelspec International, Inc. (“Intelspec”) in exchange for 14,000,000 shares of its common stock. The acquisition of Intelspec was completed on April 14, 2010, whereby the shareholders of Intelspec acquired 70% of the Company. The closing of the transaction represented a change in control which for financial reporting purposes was characterized as a reverse acquisition or recapitalization of Intelspec. Following the closing, our principal business became that of Intelspec. On April 26, 2010, the Company disclosed the information that would have been required if it were filing a general form for registration of securities on Form 10, as required under Item 2.01(f) of Form 8-K, thereby removing its status as a “shell” company.
The Company effected a six for one forward split of its common stock on June 11, 2010 that increased the Company’s issued and outstanding shares from 20,000,000 to 120,000,000.
Intelspec changed its name to Interspec International, Inc. ("Interspec") pursuant to an out-of-court legal settlement with Intel Corporation on November 21, 2011
On February 6, 2012, the Company made the determination to change its fiscal year end from June 30 to December 31.
On February 4, 2013, the Company authorized the issuance of 9,000,000 of its 10,000,000 available shares of Super Voting Preferred Stock for the settlement of nearly $256,000 in debt. The holders of Super Voting Preferred Stock are entitled to fifty votes for each share of Super Voting Preferred Stock held at each meeting of stockholders of the Company.
On March 31, 2014, stockholders consented in writing to amend the Company's Articles of Incorporation (the "Articles of Amendment") to increase the Company’s authorized shares of common stock from 500,000,000 common shares to 3,000,000,000 shares. The Company subsequently disseminated a Definitive Information Statement. The Articles of Amendment became effective upon filing with the Nevada Secretary of State on June 23, 2014.
During 2014, the Company determined that it had nominal assets and these assets consisted solely of cash, and therefore the Company determined that it became a “shell” company as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
On June 25, 2014, the Company closed an Agreement with Sagar Joseph Choran and acquired Orbis Real Estate, a Dubai-based brokerage company, as a wholly owned subsidiary. The Company authorized the issuance of 160,000,000 shares to Joseph pursuant to the Agreement. At that time the Company ceased being a "shell” company.
In July 23, 2014 the Company dissolved its subsidiary Interspec International, Inc.
On July 24, 2014, the Company authorized the conversion of 9,000,000 shares of Preferred stock issued on February 4, 2013, to 450,000,000 shares of the Company's common stock.
In September 2014, the Company appointed a new director and corporate secretary, Cyril Means, to serve until the next annual general meeting shareholders.
In October 2014, the Company authorized the conversion of $15,000 in aged debt to 10,000,000 shares of the Company's common stock.
During 2015, the Company authorized the issuance of 43,016,667 shares of common stock for an accounts payable and for a note.
On July 1, 2015 the Company agreed to divest Orbis back to its original owners. Consideration to the Company included the return of the 160,000,000 shares issued to the owners of Orbis, and the assumption by the original owners of all Orbis liabilities as of June 30, 2015. The Company has retired the 160,000,000 shares, and no longer consolidates the Orbis financial statements after June 30, 2015.
Our common stock is quoted on the OTC Pink electronic quotation system under the symbol “IDVC”.
Overview of Infrastructure Developments Corporation
The Company’s operations and plans have been significantly impacted by global developments in 2015. In particular, the sustained downturn in global oil and commodity prices had significant repercussions in the Gulf Cooperation Council economies, notably the United Arab Emirates (UAE). The 2015 sustained slowdown in the UAE caused IDVC to divest its interest in Orbis Realty on June 30 2015, retiring 160,000,000 shares of common stock in the process and incurring no loss. IDVC has also reduced its emphasis on energy-related markets in the Middle East and the U.S. in its marketing plans for the Wing House mobile shelters.
The Company is currently focused on its project management business, which provides services through a network of consultants and partners located in markets where the Company has active projects, is bidding on projects, or is investigating project opportunities and opportunities to market its Wing House mobile shelters. The Company has also prioritized marketing alternative energy products such as residential, commercial, and industrial solar energy systems, battery back-up systems, and magnetic transducer generators.
Orbis Real Estate Overview
During January 2015 to July 2015, Orbis Real Estate was a full-service Real Estate broker located in Dubai, United Arab Emirates, handling residential and commercial property transactions. Orbis offices are Al Shafar Tower 1, No 803, Tecom, Dubai, United Arab Emirates. Orbis Real Estate is fully licensed by Dubai’s Real Estate Regulatory Authority (RERA) registration number 12387. Orbis was formed as a sole establishment on August 12, 2014 and received its license to transact real estate brokerage business, sales and rental, on August 18, 2014, by the Government of Dubai, United Arab Emirates, Department of Economic Development.
The Dubai Real Estate Market
Dubai was the world’s top performing real estate market through 2013 and early 2014, leading the Global Property Guide’s house price survey for five consecutive quarters. Residential prices rose 31.57 per cent during the year prior to Q1 2014. UK-based Knight Frank reports that house prices rose 27.7 per cent over the 12 months to March 2014, the fastest pace among the 54 countries tracked by the consultancy’s global house price index. However, the number of transactions in 2015 slowed significantly, property prices have been flat, and there was a contraction in gross revenue at many brokerage firms in 2015.
This radical increase in 2013, backed by IMF warnings of an overheating market, led the UAE Central Bank to introduce a package of new regulations, including mortgage caps and increased transaction fees, aimed at cooling the market. These measures, combined with the introduction of a substantial number of new units a widespread perception that prices had escalated too fast, led to a substantial slowing of the market beginning in mid-2014. Dubai's property prices rose by 12.98% in 2014, down from 21.52% in 2013, and 21.64% in 2012, but home prices actually dropped, though slightly, in the 3rd and 4th quarters. This trend continued in the first two quarters of 2015, with the REIDIN sales index indicating that apartment prices fell two per cent quarter-on-quarter in Q1, while villa prices dropped by one per cent compared to Q4, 2014.
In 2008, construction and real estate accounted for one-third of the economy, but that figure has now been reduced to less than 15%. Foreign trade, a key element of Dubai’s economy, has shown consistent growth, from 1.1 trillion dirhams in 2011 to 1.235 trillion in 2012, 1.329 trillion in 2013 and 1.331 trillion in 2014. The acceleration of foreign trade underscores Dubai’s role as regional trade and financial hub. However, an overall slowdown in the UAE economy in 2015 was fueled by a sustained period of low oil prices, large number of SME business loan defaults, and general panic in the local banking industry.
The Dubai Real Estate Brokerage Industry
Dubai’s real estate brokerage business is highly fragmented and highly competitive: regional news provider Zawya wrote on Sept 10, 2014 that there are 2238 real estate brokers licensed by Dubai’s Real Estate Regulatory Authority (RERA), which regulates real estate brokers. Unlike the property development industry, which is dominated by publicly traded entities, the brokerage business is dominated by privately held entities that disclose little information about their operations. RERA lists the individual licensed brokers employed by each firm, but does not maintain public data on transactions or revenues per broker.
Review of a randomly selected sample of brokers listed on RERA’s website suggests that roughly 25% of Dubai’s registered real estate brokerage firms employ only a single broker, with roughly 70% employing 3 or fewer. Many of these small brokerages focus on a single niche market focused on a single region or nationality (e.g. Russian-speaking brokers serving an almost exclusively Russian clientele). Many of these firms rely on a small network of contacts and have little online presence. Firms with 4-9 brokers account for 20% of the total. 9% have 10-30 brokers on staff, while only 1% have over 30. The recognized dominant player, Better Homes, has 12 Dubai offices and over 400 employees. International firms such as Cluttons International, Colliers International, Jones Lang LaSalle, C.B. Richard Ellis and others are active in the market, typically focusing on large scale commercial deal making.
RERA CEO Marwan bin Ghalita has publicly stated in 2014 that RERA believes that there are too many brokerage firms in Dubai, and the agency is phasing in regulations aimed at reducing the number of active firms, including:
The pass mark for the mandatory test for renewal of broker’s license will increase from 75 percent to 85 percent from the start of 2015.
Broker cards will be phased out by June 2015, with registration to be linked to an Emirates ID.
New brokerage firms will be allowed to employ four agents for the first year and any increases to depend upon the firm’s transaction performance.
Agents who have not completed a transaction for anywhere between six to 12 months will receive a letter from RERA warning about their performance and if there is no improvement, RERA will cancel their registration.
Orbis Realty faced challenges common to any highly competitive urban brokerage environment, and challenges that are specific to Dubai.
The basic competitive challenges common to the industry in any highly competitive environment are, in summary, competition to generate unique sale and rental listings, competition for access to buyers, and competition for recruitment and retention of quality staff, particularly experienced licensed brokers.
Orbis also faced challenges unique to the Dubai market, including:
Generating a sufficient number and quality of sales and rental listings has emerged as the single most significant challenge for Dubai real estate brokers. Competition for listings is intense, particularly now that the previously common practice of cold calling property owners to look for potential sellers has been banned.
As discussed above, unprofessional and/or unethical behavior by some brokers has led some buyers and sellers to take a negative view of Dubai-based brokers as a whole, a prejudice that must be overcome by legitimate brokers.
While most legitimate brokers welcome the tightened regulatory environment now prevailing in Dubai, the rapid implementation of regulatory changes has occasionally created confusion and problems for brokers. Regulations may not be formally announced, and are often the subject of rumor and speculation. License renewal may take much longer than expected due to bureaucratic backlog, removing brokers from service. At times Developers have aggressively pushed projects still listed by RERA as “on hold”, generally due to delayed procedures or incomplete documentation. These factors and other similar ones add up to a compliance environment that requires vigorous and proactive effort from brokers who wish to stay fully informed of and compliant with a rapidly developing regulatory environment.
Additional challenges are likely to be posed by the evolution of the market as a whole. The aggressively expansionary market of 2012-2013 no longer exists, with most analysts expecting prices to show a moderate decline in 2015 - 2017, with transaction volume increasing as prices moderate. Orbis has observed price corrections in popular developments or locations driven by prices that have risen to a point that leads owners of investment properties to take profit. The resulting surge of properties on the market increases available supply and slows price growth, but it also provides new listings for brokers at manageable prices that are attractive to buyers. The reduced rate of price growth has a greater negative impact on developers, who have to gain returns on very large investments, than on brokers, who have a vested interest in seeing prices remain at relatively affordable levels.
Wing House Overview
During 2015 the Company purchased a Wing House for $85,000, which the Company is using for marketing purposes. The standard Wing House units are mobile modular prefabricated structures that fold out from standard 40-foot or 20-foot shipping containers to ready-to-use structures, with all baths, water, plumbing, air conditioning, lighting, cable, network and electrical fittings in place. This folding capacity allows a standard 40-foot unit delivered with a 320 square foot footprint to open into an 880 square foot structure in 4 to 5 hours, in a process requiring only basic hand tools and workers capable of following simple instructions. Any truck and hoisting equipment capable of handling standard shipping containers can transport and place a Wing House. Since container sizes are standard around the world, this equipment is widely available. The combination of standard ISO container dimensions and fittings and the ability to quickly unfold into a structure much larger than the original container makes the Wing House extremely economical to ship. Two or more Wing Houses can be joined end to end or side to side to form larger structures. Multiple standard floor plan configurations are available and custom plans can be ordered.
While other container-based prefabricated structures are available, they offer final available space equal to that of the original container. We are aware of no other container-based prefabricated modular structure that shares the ability of the Wing House to open into a structure much larger than the delivered unit.
Wing Houses are rated for extreme temperatures, safe in hurricanes and earthquakes, meet the highest safety and building code standards, and are very economical. The units use insulation sourced from Bradford Insulation, Australia’s leading insulation brand. The units carry a 5-star energy use rating and are ideal for use in extreme climates.
Wing Houses come in many building configurations and room configurations, and they retail at approximately $45,000-$85,000 ex-port in China. The Wing House is built in China by Renhe Manufacturing and has been re-branded by the Company. Renhe has an exclusive worldwide distribution agreement with MKL Asia, a company owned by the original patent holder who is also the principal of Renhe. MKL Asia has granted a sub-distribution license to the Company and its affiliates to market and sell Wing House in North America, the Middle East region and most of Southeast Asia.
Wing Houses are suitable for a wide range of applications, including:
living and office space
on site showrooms
forward operations bases
Standard configurations include:
3 bedrooms + 1 living room + 1 kitchen + 1 bath + 1 laundry
4 bedrooms + 2 kitchens + 2 baths
4 bedrooms + 4 baths
6 bedrooms + 6 baths
8 bedrooms + 4 baths
1 classroom + 1 bath + 1 office
1 large room
The Wing House is available in configurations specifically optimized for classroom use, wired with high speed Internet and with computer stations included.
The range of products also includes the newly developed “pop out” 20 and 40 foot rapid deployment units that slide out in minutes and are also pre-fit with all baths and fixtures.
The Freedonia Group predicted in March 2016 that global demand for prefabricated housing is will increase 2.7 percent per year through 2019 to 3.4 million units, with “the vast majority” concentrated in the Asia-Pacific region. Global Industry Analysts Inc projected in May 2015 that demand in the Asia-Pacific region would reach a compound annual growth rate of 9.3% through 2020.
The Company holds distribution rights for the Wing House in Southeast Asia, a region that the OECD expects to maintain a “robust” average of 5.5% over the next five years. Southeast Asian nations have abundant use for rapidly deployable, easily moveable prefabricated structures: large infrastructure projects, mining and other resource-extraction industries, mobile classrooms, disaster relief, refugee housing, and temporary offices are among the niches open for the Wing House in Southeast Asia. Southeast Asia’s rapid growth and multiple product niches make the region IDVC’s primary target for marketing the Wing House.
The North American market for modular, transportable, prefabricated structures is dominated by workforce housing for the energy and mining industries. Lower oil prices and commodity prices in 2015 resulted in less demand from these industries for mobile structures, a situation that is expected to continue through the medium term future. US marketing for the Wing House will in the meantime focus on mining, logging, and other resource exploitation industries, and on disaster relief, where the mobility and rapid deployment capacity of the Wing House are significant competitive advantages.
IDVC holds distribution rights for the Wing House in the Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE). The current environment of low world oil prices has resulted in a dramatic retrenchment in spending on both energy development and major construction projects. The Company has decided to curtail marketing efforts in this region until economic conditions are more favorable.
Wing House Competition
The Wing House mobile shelter faces no direct competition as a prefabricated expandable container-based mobile shelter system though a variety of site-built shelter options provide indirect competition. Typical portable cabins used as temporary offices in some regions are much cheaper than the Wing Houses, but they (i) have a life span of much less than half that of a Wing House, (ii) cannot be moved and re-used without virtually rebuilding the units, (iii) can only be trucked as 35 square meters of cabin space per truck (as opposed to Wing House 80 square meter per truck folded in), and (iv) have inferior wiring, lighting, bath fixtures, and insulation. The Wing Houses are competitively priced in certain markets, and for certain users that are looking for more modern and efficient workforce accommodation as opposed to the more utilitarian pre-fabricated structures used in the past.
A number of US and Canadian companies compete in the high quality prefabricated structure market, notably Sunbelt Modular, Pacific Mobile Structures, Mobile Modular, Satellite Shelters, Williams Scotsman, M Space Modular Buildings, and ModSpace. These companies use a variety of systems, typically “panelized”, to install mobile structures in various configurations. Many of these structures are designed to be semi-permanent, and fill a distinctly different niche from the Wing House. They offer greater flexibility in terms of size, with larger and more open floor plans available. They are also typically more expensive and require more time to install. While these structures will continue to dominate the market for larger structures, the Company believes that the Wing House will fill an underserved niche demand for high quality structures offering a far higher degree of mobility and far faster installation than current offerings.
The Company will also compete with companies focused on the leasing of modular workforce housing and the management of workforce housing facilities. Companies engaged in this business include Black Diamond Group Limited, Target Logistics, Atco Structures and Logistics, Rapid Camp Ltd, Guerdon Modular Buildings, Williams Scotsman, Stock Modular, Wilmot Modular Structures, and many others. While some of these companies do produce their own modular housing units, their primary business lies in leasing, installation, and management of workforce camps. The rapid growth of this sector is demonstrated by the recent results of the Black Diamond Group, a publicly traded industry leader with operations focused on Western Canada, which as more than tripled it income since 2009.
The Company recognizes these companies as competitors but also sees them as potential customers. If the Company can provide these companies with a facility option that is more economical, more efficient, and more easily portable than the structures they currently use, we believe that a significant number of these companies would adopt the Wing House as part of their leasing fleet.
Solar Energy Systems
IDVC holds a marketing license agreement with First Energy Solutions Provider Inc (FESPI), a Canadian-owned provider of alternative energy solutions headquartered in the Philippines. The Company is focusing on marketing medium scale residential, commercial, and industrial solar power and battery backup systems in the Philippines and Cambodia, where conditions ore uniquely suitable for rapid growth in the solar industry. Both countries are experiencing rapid economic growth with consequent high growth in electricity demand. Both countries have a high degree of solar irradiation, combined with inadequate conventional generating capacity, high electricity costs, and inadequate and unreliable distribution grids, a situation which has made both grid-tied and off-grid solar installations extremely competitive. Both countries offer substantial government incentives for solar power installations, an additional competitive advantage.
The Asian Development Bank has stated that “Cambodia has the highest energy prices in Southeast Asia, ranging from $0.18/kWh to $1/kWh in the rural areas… Cambodia has substantial solar resources that could be harnessed on a competitive basis.” In the Philippines, widespread dissatisfaction with a primitive distribution grid, the high cost of grid power, and the difficulty of reliable distribution in an archipelagic country have driven intense interest in solar power as a decentralized, independent option for powering both rural and urban residences, businesses, and industries.
Terje Osmundsen, Senior Vice President of Norway’s Scatc Solar ASA, recently commented that “The Philippines has huge potential for generating unsubsidized solar power as the cost of producing solar power has fallen by 60% since 2009, when the current Power Development Plan was approved. This has made solar power increasingly price-competitive with fossil fuel-based power plants”.
IDVC is a licensed marketing agent for solar energy systems designed and sold by First Energy Systems Provider Inc in the Philippines, Cambodia, and the United Arab Emirates. These systems are fully integrated use-ready installations, and prices include installation and system design tailored to the user’s needs. All the system owner needs to do is turn the system on and watch energy costs shrink. Most users will find that the cost of the installation can be recovered in five years. After that, power is essentially free.
The solar power systems marketed by IDVC may be generally divided into three types: grid-tied, hybrid, and off-grid. A grid-tied solar system retains a connection to the electrical grid, allowing the user to fall back on grid power when the solar system is unable to generate the needed power. This is by far the most popular form of installation, and offers a high degree of flexibility to users.
The simplest form of grid-tied system uses solar power to supplement grid power. Essentially this system relies on solar power when generation from the solar panels is sufficient to meet the demand from the installation, and automatically switches back to main power when solar power is insufficient. These systems are relatively inexpensive to install and can significantly reduce electricity costs, especially for users that have significant daytime consumption. These systems consist simply of solar panels, an inverted to convert the solar power from DC to AC and synchronize the phase and frequency with the electrical grid, and the switching hardware needed to move between solar and main power.
The hybrid system retains the connection to main power, but introduces a charge controller and battery bank, allowing reliance on solar power to extend into periods of low or absent sunshine. Since many solar systems provide surplus power during periods of peak sunshine, these systems provide a way to capture that surplus for later use. Some hybrid systems use sufficient battery power to run an installation for 24 hours, and rely on grid power only for backup. Others use smaller battery banks that are designed to provide more limited coverage, relying on grid power during off-peak hours, usually late at night, when electricity is typically cheaper. Hybrid systems represent a higher up-front cost, but can also generate more significant savings. For example, a power user with high demand in the evening would be well served by a hybrid system with sufficient battery power to provide 4-6 hours of backup power and reverting to grid power only during the night and early morning hours.
An off-grid solar system is designed for users who have no access to an electrical grid or prefer to be completely independent of grid power. Typically the off-grid system is identical to the hybrid system, but with a larger battery bank and a generator for backup power. These systems represent a considerable investment, but for many users, for example an island resort or remote business site that is fully dependent on a generator for power, they remain cost-effective and economical.
IDVC, in cooperation with FESPI, provides all of these system types in a complete, fully integrated package including professional installation, allowing the client to take over a fully operable system with a single complete, reliable price quotation for a system tailored to their specific needs.
IDVC will be aggressively marketing its integrated solar power systems in these markets, both for existing structures and in conjunction with the Wing House, which is ideally suited to solar power.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts
The Company neither own nor have applied for any patents or trademarks. We do not license any of our technology from other companiesWe have an exclusive distribution agreement with MKL Asia / Renhe Mobile Shelters of China for the Wing Houses. The agreement between MKL and the Company is written as a sub-distributor appointment by MKL, has no specific commission or compensation terms, and can be canceled by MKL with 60 day notice. We are not party to any franchise agreements, royalty agreements, concessions, or labor contracts.
Dependence on Major Customers or Suppliers
The Company is not dependent on one or a few customers, as we have products targeted to a wide range of buyers.
The Company is subject to local, state and national taxation in the jurisdictions where it operates.
Local municipal building code issues in the United States have proven to be a significant hurdle for sales of Wing Houses to retail buyers. Most municipalities in the U.S. have fairly strict requirements for “temporary” structures, thus limiting the potential for sales of individual units to buyers inside city limits.
Health and Safety
We are subject to numerous health and safety laws and regulations imposed by the governments controlling the jurisdictions in which we operate and by or clients and project financiers. These regulations are frequently changing, and it is impossible to predict the effect of such laws and regulations on us in the future. We actively seek to maintain a safe, healthy and environmentally friendly work place for all of our employees and those who work with us. However, we provide some of our services in high-risk locations and as a result we may incur substantial costs to maintain the safety of our personnel. All of our operations and personnel are covered by comprehensive “all risk” insurance, the costs of which are included in our contracts.
Office of Foreign Assets Control
The Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. OFAC acts under presidential national emergency powers as well as authority granted by specific legislation to impose controls on transactions and freeze assets under U.S. jurisdiction. Since the Company is a U.S. corporation, it is bound to the regulations of OFAC. Although we have never contracted nor made any effort to contract with countries which OFAC has identified as state sponsors of terrorism, the possibility exists that certain OFAC sanctioning methods could be employed against certain of our operations.
The countries where we do business often have numerous environmental regulatory requirements by which we must abide in the normal course of our operations. We do not expect costs related to environmental matters will have a material adverse effect on our consolidated financial position or our results of operations.
Climate Change Legislation and Greenhouse Gas Regulation
Many studies over the past couple decades have indicated that emissions of certain gases contribute to warming of the Earth’s atmosphere. In response to these studies, many nations have agreed to limit emissions of “greenhouse gases” or “GHGs” pursuant to the United Nations Framework Convention on Climate Change, and the “Kyoto Protocol.” Although the United States did not adopt the Kyoto Protocol, several states have adopted legislation and regulations to reduce emissions of greenhouse gases. Additionally, the United States Supreme Court has ruled, in Massachusetts, et al. v. EPA, that the EPA abused its discretion under the Clean Air Act by refusing to regulate carbon dioxide emissions from mobile sources. As a result of the Supreme Court decision the EPA issued a finding that serves as the foundation under the Clean Air Act to issue other rules that would result in federal greenhouse gas regulations and emissions limits under the Clean Air Act, even without Congressional action. Finally, acts of Congress, particularly those such as the “American Clean Energy and Security Act of 2009” approved by the United States House of Representatives, as well as the decisions of lower courts, large numbers of states, and foreign governments could widely affect climate change regulation. Greenhouse gas legislation and regulation could have a material adverse effect on our business, financial condition, and results of operations.
We have no employees other than our officer/director who devotes a portion of his time to the operations of the Company. We also have part-time consultants and sales agents in the Middle East, Southeast Asia, and Texas. We believe we have a good working relationship with our agents and consultants, which are not represented by a collective bargaining organization. We also use third party consultants to assist in the completion of various projects; third parties are instrumental to keep the development of projects on time and on budget. Our management expects to continue to use consultants, attorneys, and accountants as necessary, to complement services rendered by our employees.
Reports to Security Holders
The Company’s annual report contains audited financial statements. We are not required to deliver an annual report to security holders and will not automatically deliver a copy of the annual report to our security holders unless a request is made for such delivery. We file all of our required reports and other information with the Securities and Exchange Commission (the “Commission”). The public may read and copy any materials that are filed by the Company with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The statements and forms filed by us with the Commission have also been filed electronically and are available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address for this site can be found at www.sec.gov.
ITEM 1A. RISK FACTORS
Our operations and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our operations, business, financial condition and/or operating results as well as the future trading price and/or the value of our securities.
Risk Factors Relating To Our Business
The Company’s ability to continue as a going concern is in question
Our auditors included an explanatory statement in their report on our consolidated financial statements for the years ended December 31, 2015 and 2014, stating that there are certain factors which raise substantial doubt about the Company’s ability to continue as a going concern. These factors include a working capital deficit, negative cash flows, and accumulated losses.
We depend on the recruitment and retention of qualified personnel, and our failure to attract and retain such personnel could seriously harm our business.
Due to the specialized nature of our businesses, our future performance is highly dependent upon the continued services of our key personnel and executive officers, the development of additional management personnel, and the recruitment and retention of new qualified engineering, manufacturing, marketing, sales, and management personnel for our operations. Competition for personnel is intense, and we may not be successful in attracting or retaining qualified personnel. In addition, key personnel may be required to receive security clearances and substantial training in order to work on government sponsored programs or perform related tasks. The loss of key employees, our inability to attract new qualified employees or adequately train employees, or the delay in hiring key personnel could impair our ability to prepare bids for new projects, fill orders, or develop new products.
International and political events may adversely affect our operations.
To date our revenue is derived entirely from non-United States operations, which exposes us to risks inherent in doing business in each of the countries in which we transact business. The occurrence of any of the risks described below could have a material adverse effect on our results of operations and financial condition. Operations in countries other than the United States are subject to various risks peculiar to each country. With respect to any particular country, these risks may include:
expropriation and nationalization of our assets in that country;
political and economic instability;
civil unrest, acts of terrorism, force majeure, war, or other armed conflict;
natural disasters, including those related to earthquakes and flooding;
currency fluctuations, devaluations, and conversion restrictions;
confiscatory taxation or other adverse tax policies;
governmental activities that limit or disrupt markets, restrict payments, or limit the movement of funds;
governmental activities that may result in the deprivation of contract rights; and
governmental activities that may result in the inability to obtain or retain licenses required for operation.
Risks Relating to Our Common Stock
Our stock price is volatile.
The market price of our common stock is highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
services offered by us or our competitors;
additions or departures of key personnel;
our ability to execute its business plan;
operating results that fall below expectations;
loss of any strategic relationship;
economic and other external factors; and
period-to-period fluctuations in our financial results.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance.
We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in the following risk factor, has increased our expenses, including legal and accounting costs, and made some activities more time-consuming and costly.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of the Commission’s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.
Our internal controls over financial reporting are not considered effective, which conclusion could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. For the period ending December 31, 2015, we were unable to assert that our internal controls were effective. Accordingly, our shareholders could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.
Our past capital funding needs have resulted in dilution to existing shareholders.
We have realized funding from Asher Enterprises, Inc., in the form of convertible notes, which has been converted into shares of our common stock. Additionally, we will need to realize capital funding over the next year to further our business plan. We intend to raise this capital through equity offerings, debt placements or joint ventures. Should we secure a commitment to provide us with capital, such commitment may obligate us to issue shares of our common stock, warrants or create other rights to acquire our common stock. Any new issuances of our common stock result in a dilution of our existing shareholders interests.
Our common stock is currently deemed to be “penny stock”, which makes it more difficult for investors to sell their shares.
Our common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Company’s securities.
The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights for our directors, officers and employees may result in substantial expenditures by the Company and may discourage lawsuits against our directors, officers and employees.
Our certificate of incorporation contains a specific provision that eliminates the liability of directors for monetary damages to the Company and the Company’s stockholders; further, the Company is prepared to give such indemnification to its directors and officers to the extent provided by Nevada law. The Company may also have contractual indemnification obligations under its employment agreements with its executive officers. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which the Company may be unable to recoup. These provisions and resultant costs may also discourage the Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by the Company’s stockholders against the Company’s directors and officers even though such actions, if successful, might otherwise benefit the Company and its stockholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
During the year ended December 31, 2015, our principals and key consultants operated out of their individual office spaces for which we paid no rent. Our principal executive office is located at 299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111. The office is located in a shared office space with a yearly rental of $588 payable on a month to month basis; we pay additional amounts to lease out additional space, as needed. Our telephone number is (801) 488-2006 and our fax number is (801) 747-6836.
Orbis Real Estate operated out of a leased office space of 1,500 square feet from January to June 2015. The lease expired in August 2015.
Our belief is that the spaces described are adequate for our immediate needs though additional space may be required at some future time as we seek to expand our operations. Should we require additional space, we do not foresee any significant difficulties in obtaining such space. We do not presently own any real property.
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. MINE SAFTETY DISCLOSURES
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock has been quoted on the OTC Pink electronic quotation system under the symbol “IDVC”. These prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions. The following table sets forth the high and low bid prices for the common stock as reported for each quarterly period from the last two years.
High and Low Bid Prices Since Quotation on the OTC Pink
The following is a summary of the material terms of the Company’s capital stock. This summary is subject to and qualified by our articles of incorporation and bylaws.
As of December 31, 2015, the Company had 260 shareholders of record holding a total of 996,791,324 shares of fully paid and non-assessable common stock of the 3,000,000,000 shares of common stock, par value $0.001, authorized. The board of directors believes that the number of beneficial owners is substantially greater than the number of record holders since shares of our outstanding common stock are held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.
As of December 31, 2015, the Company had no shares of preferred stock issued of the 10,000,000 shares of preferred stock, par value $0.001 per share, authorized.
As of December 31, 2015, the Company had no warrants to purchase shares of stock.
As of December 31, 2015, the Company had no stock options to purchase shares of stock.
The Company has not declared any cash dividends since inception and does not anticipate paying any dividends in the near future. The payment of dividends is within the discretion of the board of directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit the Company’s ability to pay dividends on its common stock other than those generally imposed by applicable state law.
Securities Authorized For Issuance under Equity Compensation Plans
As of December 31, 2015, the Company had no convertible securities outstanding.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
Purchases of Equity Securities made by the Issuer and Affiliated Purchasers
Transfer Agent and Registrar
The contact information for our transfer agent is as follows:
Action Stock Transfer Corp.
2469 E. Fort Union Blvd, Ste 214
Salt Lake City, UT 84121
SELECTED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this current report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this current report. Our fiscal year end is December 31.
For the twelve month period ended December 31, 2015:
The Company divested its ownership of Orbis Real Estate in Dubai to it previous owners. Consideration was the return of 160,000,000 shares that were issued to the owners in the original acquisition transaction in 2014, and assumption of all Orbis liabilities as of June 30, 2015.
Entered into memorandums of understanding with First Energy Solutions Providers Inc. and Everforce Energy Inc. to market and manage future projects involving solar power, battery back-up banks, and magnetic transducer generators. One battery back-up system has been sold in 2015 and this revenue was booked under other income.
Net income for the twelve month period ended December 31, 2015, was $65,647 as compared to a net loss of $231,821 for the twelve month period ended December 31, 2014. The change from net loss to net income over the period was due to the reduction in liabilities and gain on disposition of Orbis Real at June 30, 2015.
Net revenues for the twelve month period ended December 31, 2015, were $29,622 as compared to $205,101 for the twelve month period ended December 31, 2014. The decrease in revenue over the comparable periods is due to lower revenue from Orbis Real Estate in the first half of 2015 compared to the first half of 2014, and the discontinuation of consolidation of Obis revenue for July – December 2015. We expect gross revenue to increase in 2016 from sales of Wing Houses and alternative energy related products.
Gross Profit for the twelve month period ended December 31, 2015 was $14,932 as compared to $64,007 for the twelve month period ended December 31, 2014. Orbis had lower revenue in the period of January – June 30, 2105, when its financial statements were consolidated, compared to the same period in 2014. And Orbis revenue was not consolidated during July – December 2015. We expect to increase gross profits in the next twelve months by selling Wing Houses and alternative energy projects.
Operating expenses for the twelve month period ended December 31, 2015 decreased to $188,995 from $193,147 for the twelve month period ended December 31, 2014. Operating expenses are from general, selling and administrative expenses, salaries and wages, and depreciation and amortization expense. The decrease in expenses over the comparable periods is due to the discontinuation of consolidation of Orbis operating losses for July – December 2015.
Other income for the twelve month period ended December 31, 2015 was $239,710 compared to other expense of $102,681 for the twelve month period ended December 31, 2014. Other expense changed to other income in 2015 due to the gain on the disposition of Orbis Real Estate in July 2015, and no write off of intangible assets during the year 2015.
Liquidity and Capital Resources
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue operations.
As of December 31, 2015, we had a working capital deficit of $272,842, a decrease from year end 2014 net deficit of $331,160. The elimination of Orbis liabilities at July 1, 2015 resulted in a lower working capital deficit. Our current and total assets included $6,931 in cash. Our current and total liabilities were $284,159 consisting of notes payable of $163,782, and accounts payable/accrued expenses of $120,377. Stockholders’ deficit was $196,342 as of December 31, 2015.
Cash flows used in operating activities for the twelve month period ended December 31, 2015 were $144,403 compared to $37,236 used for the twelve month period ended December 31, 2014. Cash flow used in operating activities in the current period is primarily due to a lesser revenue and profit compared to the previous period. We expect to increase cash flow provided by operations over the next twelve months along with the increase in net income. During 2015 the Company purchased a Wing House for $85,000.
Cash flows generated used in investing activities for the twelve month period ended December 31, 2015 were $75,504, compared to $102,681 used in the twelve month period ended December 31, 2014. We expect to use cash flow in investing activities over the next twelve months as we develop our Wing House and energy business.
Cash flows provided by financing activities for the twelve month period ended December 31, 2015 were $224,191 compared to $139,207 for the twelve month period ended December 31, 2014.
Our current assets are insufficient to meet the Company’s business objectives over the next twelve months. We need a minimum of $100,000 in debt or equity financing to maintain operations and to fulfill our business plan. Although, we have no commitments or arrangements for this level of financing, our shareholders remain the most likely source of loans or equity placements to ensure our continued operation though such support can in no way be assured. Our inability to obtain additional financing will have a material adverse effect on our business operations.
We have no lines of credit or other bank financing arrangements in place.
We have no commitments for future capital expenditures that were material at the end of the period.
We have no defined benefit plan or contractual commitment with any of our officers or directors.
We have no current plans for the purchase or sale of any plant or equipment. We have no current plans to make any changes in the number of employees. We do not expect to pay cash dividends in the foreseeable future.
Future Company Financings
We will continue to rely on debt or equity sales to continue to fund our business operations even though the issuance of additional shares will result in dilution to our existing stockholders.
Company Reporting Obligations
We do not anticipate any contingency upon which it would voluntarily cease filing reports with the Securities and Exchange Commission as it is in the interest of the Company to report its affairs quarterly, annually and currently to provide accessible public information to interested parties.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Interest rates are generally controlled. The majority of our debt is owed to a related party at a fixed interest rate so fluctuations in interest rates do not impact our result of operations at this time. However, we may need to rely on bank financing or other debt instruments in the future in which case fluctuations in interest rates could have a negative impact on our results of operations.
Forward Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this annual report, with the exception of historical facts, are forward looking statements. We are ineligible to rely on the safe-harbor provision of the Private Litigation Reform Act of 1995 for forward looking statements made in this annual report. Forward-looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:
our financial performance;
the sufficiency of existing capital resources;
our ability to fund cash requirements for future operations;
uncertainties related to the growth of our business and the acceptance of our services;
our ability to achieve and maintain an adequate customer base to generate sufficient revenues to maintain and expand operations;
the volatility of the stock market; and
general economic conditions.
We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated including the factors set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than is required by law.
Our auditors included an explanatory statement in their report on the Company’s consolidated financial statements for the years ended December 31, 2015 and 2014, expressing an opinion as to our ability to continue as a going concern as a result of a working capital deficit, negative cash flows, and accumulated net losses. Our ability to continue as a going concern is subject to the ability of the Company to transition to net income in 2016 and obtaining additional funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern includes (i) increasing our gross profit; (ii) financing from private placement sources; and (iii) converting outstanding debt to equity. Although the Company believes that it will be able to remain a going concern, through the methods discussed above, there can be no assurances that such methods will prove successful.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
We have adopted Accounting Standards Codification Topic (“ASC”) 718, Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.
We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited financial statements for the fiscal years ended December 31, 2015 and 2014 are attached hereto as F-1 through F-11.
INFRASTRUCTURE DEVELOPMENTS CORP.
Twelve Months Ended December 31, 2015 and December 31, 2014
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Pinaki & Associates LLC
Certified Public Accountants
625 Barksdale Rd., Ste# 113
Newark, DE 19711
Phone: 408-896-4405 | email@example.com
INDEPENDENT AUDITOR’S REPORT
To The Board of Directors
Infrastructure Developments Corp.
299 S. Main Street, 13th Floor
Salt Lake City
We have audited the accompanying consolidated balance sheets of Infrastructure Developments Corp. and subsidiaries as of December 31, 2015, December 31, 2014 and the related consolidated statements of income, stockholders’ equity and cash flows for the year ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
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 misstatement. 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.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations that raises a substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Infrastructure Developments Corp. and subsidiaries as of December 31, 2015, and December 31, 2014, and the related consolidated statements of income, stockholders’ equity and cash flows for the year ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.
Pinaki & Associates LLC.
April 29, 2016
The accompanying notes are an integral part of these consolidated financial statements.
INFRASTRUCTURE DEVELOPMENTS CORP.
Notes to the Financial Statements for the Periods Ended December 31, 2015 and 2014
NOTE 1 - ORGANIZATION AND HISTORY
Infrastructure Developments Corp. (the “Company”), formerly 1st Home Buy and Sell Ltd., was incorporated under the laws of the state of Nevada on August 10, 2006. The Company changed its name to “Infrastructure Developments Corp.” on March 1, 2010.
On April 14, 2010, the Company and Interspec International, Inc. (“Interspec”, formerly Intelspec International, Inc.), a Nevada corporation, engaged in engineering, construction, and project management executed a stock exchange agreement, whereby the Company agreed to acquire 100% of the issued and outstanding shares of Interspec in exchange for 14,000,000 shares of the Company’s common stock. Because the owners of Interspec became the principal shareholders of the Company through the transaction, Interspec was considered the acquirer for accounting purposes and this transaction is accounted for as a reverse acquisition or recapitalization of Interspec. Interspec was dissolved subsequent to the period ended June 30, 2014.
Effective June 25, 2014, the Company acquired the assets, business, and operations of Orbis Real Estate ("Orbis"), a real estate brokerage firm based in Dubai, United Arab Emirates. The transaction involves issuance of the Company's common shares in return for full control of Orbis’ business. The owners of Orbis became insider shareholders of the Company. Accordingly Orbis is accounted for as the predecessor to the Company and the historical financial statements are presented as those of the Company through June 25, 2015 after which the financial statements are consolidated with those of Infrastructure Developments Corp.
On July 1, 2015 the Company agreed to divest Orbis back to its original owners. Consideration to the Company included the return of the 160,000,000 shares issued to the owners of Orbis, and the assumption by the original owners of all Orbis liabilities as of June 30, 2015. The Company has returned the 160,000,000 shares back to its treasury, and did not consolidate the Orbis financial statements after June 30, 2015.
The Company is a global engineering and project management business that provides services through a network of consultants located in markets where the Company either has active projects, is bidding on projects, or is investigating project opportunities and opportunities to market its Wing House mobile shelters and alternative energy products.
NOTE 2 – GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business. Accordingly, they do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company has accumulated losses and working capital and cash flows from operations are negative which raises doubt as to the validity of the going concern assumptions. These financials do not include any adjustments to the carrying value of the assets and liabilities, the reported revenues and expenses and balance sheet classifications used that would be necessary if the going concern assumption were not appropriate; such adjustments could be material.
INFRASTRUCTURE DEVELOPMENTS CORP.
Notes to the Financial Statements for the Periods Ended December 31, 2015 and 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Consolidation
The financial statements herein include the operations of the Orbis up to June 30, 2015. For the periods subsequent to the acquisition date of June 25, 2014, up to June 30, 2015, the financial statements are herein reflect the consolidated financial position and operations of the Company and Orbis. All intercompany transactions and balances have been eliminated in consolidation.
b. Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities to the Company of three months or less to be cash equivalents.
c. Accounts Receivable
Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables, and changes in payment histories. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. A trade receivable is considered to be past due if any portion of the receivable balance has not been received by the contractual pay date. The allowance for doubtful receivables was $-0- as of December 31, 2015 and December 31, 2014.
d. Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation. Depreciation and amortization on capital leases and property and equipment are determined using the straight line method over the estimated useful lives (usually ten years) of the assets or terms of the leases. Expenditures for maintenance and repairs are expensed when incurred and betterments are capitalized. Gains and losses on the sale of property and equipment are reflected in operations. During 2015 the Company purchased a Wing House for $85,000 which has been capitalized as a fixed asset (with a depreciation for 2015 of $8,500).
e. Revenue Recognition
Revenues from Sales and Services consist of revenues earned in activity by the Company and Orbis though real estate brokerage, project & construction management, sales of Wing Houses, and misc. services provided. All sales/service revenue is recognized when the sale/service is complete and the Company has determined that the sale/service proceeds are collectible.
f. Stock Based Compensation
The Company adopted ASC Topic No. 718 effective January 1, 2006 using the modified prospective method. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC Topic No. 718. The Company issued no compensatory options to its employees during the year ended December 31, 2015 and the year ended December 31, 2014.
INFRASTRUCTURE DEVELOPMENTS CORP.
Notes to the Financial Statements for the Periods Ended December 31, 2015 and 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Foreign Exchange
The Company’s reporting currency is the United States dollar. The Company’s functional currency is also the U.S. Dollar. (“USD”) Transactions denominated in foreign currencies are translated into USD and recorded at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated into USD at the foreign exchange rates prevailing at the balance sheet date. Realized and unrealized foreign exchange differences arising on translation are recognized in the income statement.
The Company expenses the cost of advertising as incurred. For the period ended December 31, 2015 and the year ended December 31, 2014, the Company had $0 and $21,511 advertising expenses, respectively.
The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for 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 expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
j. Basic and Diluted Loss per Common Share
The computation of basic loss per common share is based on the weighted average number of shares outstanding during each year. The computation of diluted loss per common share is based on the weighted average number of shares outstanding during the year, plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding, using the treasury stock method and the average market price per share during the period.
k. Impairment of Long-Lived Assets
The Company reviews long-lived assets such as property, equipment, investments and definite-lived intangibles for impairment annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As required by ASC Topic 360, the Company uses an estimate of the future undiscounted net cash flows of the related asset or group of assets over their remaining economic useful lives in measuring whether the assets are recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent of other groups of assets. The Company recorded an impairment of its intangible assets of $-0- and $102,681 for the years ended December 31, 2015 and 2014, respectively.
INFRASTRUCTURE DEVELOPMENTS CORP.
Notes to the Financial Statements for the Periods Ended December 31, 2015 and 2014
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
l. Concentration of Credit Risk and Significant Customers
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of receivables and notes receivable. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations.
The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
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. Accordingly, actual results could differ from those estimates.
n. Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
o. Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, investments, receivables, payables, and notes payable. The carrying amount of cash, investments, receivables, and payables approximates fair value because of the short-term nature of these items. The carrying amount of long-term notes payable approximates fair value as the individual borrowings bear interest at market interest rates.
NOTE 4 – SHORT-TERM NOTES PAYABLE
The Company has from time to time short-term borrowings from various unrelated and related entities. These advances are non-interest bearing, unsecured and due upon demand. Because of the short-term nature of the notes the Company has not imputed an interest rate. The Company owed $163,782 and $237,810 for short term notes payable as of December 31, 2015 and 2014, respectively.
NOTE 5 – RELATED PARTY TRANSACTIONS
The Company had $0 notes payable to related parties as of December 31, 2015 and $17,101 as of December 31, 2014.
INFRASTRUCTURE DEVELOPMENTS CORP.
Notes to the Financial Statements for the Periods Ended December 31, 2015 and 2014
NOTE 6 – STOCKHOLDERS' EQUITY
The Company is authorized to issue 3,000,000,000 shares of $0.001 par value common stock and 10,000,000 shares of preferred stock, par value $0.001 per share. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.
On July 1, 2015 the Company acquired back and retired the 160,000,000 shares issued in June 2014 to Sagar Joseph Choran when it acquired its ownership of Orbis Real Estate.
As of December 31, 2015, the Company had 996,791,324 shares of common stock and no preferred stock issued and outstanding.
NOTE 7 – SUBSEQUENT EVENTS
In accordance with Accounting Standards Codification (ASC) topic 855-10 “Subsequent Events”, the Company has evaluated subsequent events through the date which the financial statements were available to be issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.