UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One) 

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

 

For the Quarterly Period Ended September 30, 2016

 

or

 

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 333-202294

 

INTELLIGENT CLOUD RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

Intelligent Cloud Resources, Inc.

8717 N. Mattox Rd. C198

Kansas City, MO, 64154 

(Address of principal executive offices)(Zip Code)

 

(647) 478-6385

(Registrant’s telephone number, including area code)

 

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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐   No ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐   No ☒

 

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

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒

 

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

 

As of November 7, 2016, the registrant had 90,866,665 shares of its common stock outstanding.

 

 

 

INTELLIGENT CLOUD RESOURCES, INC.

 

QUARTERLY REPORT ON FORM 10-Q

September 30, 2016

 

TABLE OF CONTENTS

 

 

		PAGE
PART I - FINANCIAL INFORMATION		1
Item 1.	Condensed Financial Statements (Unaudited)	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18
PART II - OTHER INFORMATION		19
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosure	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
SIGNATURES		20

 

 

PART I – FINANCIAL INFORMATION

 

Condensed Interim Financial Statements (Unaudited)

 

INTELLIGENT CLOUD RESOURCES INC.

 

For the nine months ended September 30, 2016

 

 

Condensed Interim Financial Statements (Unaudited)

 

Condensed Balance Sheets	3
Condensed Statements of Operations and Comprehensive Loss	4 - 5
Condensed Statements of Cash Flows	6
Notes to the Condensed Interim Financial Statements	7 - 11

  

 

INTELLIGENT CLOUD RESOURCES, INC.

 

CONDENSED BALANCE SHEETS

As at September 30, 2016 and December 31, 2015
		September 30,				December 31,
		2016				2015
		Unaudited				Audited
		$				$
CURRENT ASSETS
Cash			28,091				74,639
Total current assets			28,091				74,639
TOTAL ASSETS			28,091				74,639
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Due to stockholders [Note 7]			22,152				4,849
Due to a related party [Note 7]			980				980
Accrued and other liabilities			19,512				76,331
Total current liabilities			42,644				82,160
Convertible promissory notes [Note 4]			—				92,569
Derivative liability [Note 5]			—				2,578
TOTAL LIABILITIES			42,644				177,307
STOCKHOLDERS' DEFICIENCY
Authorized:
100,000,000 common stock,  par value $0.001
Issued and outstanding:
90,866,665 common stock at $0.001 as at September 30, 2016 (December 31, 2015: 90,000,000) [Note 6]			90,866				90,000
Additional paid-in capital			64,397				(71,838	)
Accumulated Deficit			(169,885	)			(120,811	)
Accumulated other comprehensive income			69				(19	)
Total stockholders' deficiency			(14,553	)			(102,668	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY			28,091				74,639

 

Going concern (Note 2)

Subsequent events (Note 8)

 

See accompanying notes

 

 

INTELLIGENT CLOUD RESOURCES, INC.

 

CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

For the three months ended September 30, 2016 and 2015
		Three months				Three months
		ended				ended
		September 30, 2016				September 30, 2015
		$				$
REVENUE		—				—
EXPENSES
Legal fees			3,100				—
Salaries and wages			4,500				—
Audit and accounting fees			4,042				2,123
Other professional fees			2,130				1,200
Interest and bank charges			4,090				69
General Expenses			200				—
Change in fair value of derivatives [Note 5]			(15,329	)			—
Total expenses			2,733				3,392
Net loss for the period before income taxes			(2,733	)			(3,392	)
Income taxes			—				—
Net loss for the period			(2,733	)			(3,392	)
Foreign currency translation adjustment			10				(31	)
COMPREHENSIVE LOSS			(2,723	)			(3,423	)
Loss per share, basic and diluted			(0.0000	)			(0.0000	)
Weighted average number of common stock outstanding, basic and diluted			90,009,420				90,000,000

 

See accompanying notes

 

 

INTELLIGENT CLOUD RESOURCES, INC.

 

CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

For the nine months ended September 30, 2016 and 2015
		Nine months				Nine months
		ended				ended
		September 30, 2016				September 30, 2015
		$				$
REVENUE			900				—
EXPENSES
Legal fees			9,145				7,025
Salaries and wages			13,559				—
Audit and accounting fees			11,650				6,071
Other professional fees			7,604				3,228
Interest and bank charges			9,900				221
General Expenses			694
Change in fair value of derivatives [Note 5]			(2,578	)			—
Total expenses			49,974				16,545
Net loss for the period before income taxes			(49,074	)			(16,545	)
Income taxes			—				—
Net loss for the period			(49,074	)			(16,545	)
Foreign currency translation adjustment			88				(39	)
COMPREHENSIVE LOSS			(48,986	)			(16,584	)
Loss per share, basic and diluted			(0.0005	)			(0.0002	)
Weighted average number of   common stock outstanding, basic and diluted			90,003,163				90,000,000

 

See accompanying notes

 

 

INTELLIGENT CLOUD RESOURCES, INC.

 

CONDENSED STATEMENT OF CASH FLOWS (Unaudited)

For the nine months ended September 30, 2016 and 2015
		Nine months				Nine months
		ended				ended
		September 30, 2016				September 30, 2015
		$				$
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period			(49,074	)			(16,545	)
Interest expense - accretion of convertible notes			2,431				—
Change in fair value of derivatives			(2,578	)			—
Interest accrued on notes converted into stock			7,131
Changes in operating assets and liabilities:
Prepaid expenses			—				(310	)
Accounts payable and accrued liabilities			(56,819	)			10,153
Net cash used in operating activities			(98,909	)			(6,702	)
INVESTING ACTIVITIES
Due from stockholders			—				3,375
Cash used in investing activities			—				3,375
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock			34,970				—
Due to a stockholder			17,303				3,151
Net cash provided by financing activities			52,273				3,151
Net (decrease) increase in cash during the year/period			(46,636	)			(176	)
Effect of foreign currency translation			88				(39	)
Cash, beginning of the period			74,639				991
Cash, end of the period			28,091				776
Cash paid for interest			nil				nil
Cash paid for taxes			nil				nil

 

See accompanying notes

 

 

INTELLIGENT CLOUD RESOURCES, INC.

Notes to the Condensed Interim Financial Statements (Unaudited)

 

1.

NATURE OF OPERATIONS

 

Intelligent Cloud Resources Inc. (the “Company”) was incorporated on March 27, 2014 in the state of Nevada. The Company is engaged in providing IT solutions and Cloud based services. The Company’s principal place of business is located at 8717 N. Mattox Rd., C198, Kansas City, MO 64154.

 

2.

GOING CONCERN

 

These condensed interim financial statements have been prepared assuming the Company will continue on a going concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. In order for the Company to meet its liabilities as they become due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.

 

There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in these condensed interim financial statements.

 

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. 

 

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the rules and regulations of the SEC. Accordingly, the unaudited condensed interim financial statements do not include all information and footnotes required by US GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed interim financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2016 or for any other interim period. The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements of the Company and the notes thereto as of and for the year ended December 31, 2015.

 

The Company’s fiscal year-end is December 31. The Company’s functional currency is Canadian (“CDN”) dollars. The Company’s reporting currency is the U.S. dollar.

 

 

INTELLIGENT CLOUD RESOURCES, INC.

Notes to the Condensed Interim Financial Statements (Unaudited)

 

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Use of Estimates

 

The preparation of the condensed interim financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed interim financial statements and the reported amounts of revenues and expenses during the reporting periods. Areas involving significant estimates and assumptions include accruals, going concern assessment, valuation of embedded derivatives within convertible promissory notes and valuation allowance for deferred tax asset. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known. Actual results could materially differ from those estimates.

 

Revenue recognition

 

Revenues from services are recognized when persuasive evidence of an arrangement exists, the services have been performed, the amount is fixed and determinable, and collection is reasonably assured.

 

Recently Issued Accounting Standards

 

The Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.

 

4.

CONVERTIBLE PROMISSORY NOTES

 

During the year ended December 31, 2015, the Company entered into convertible promissory note agreements (the “Agreements”) with certain investors (referred to as the "the Holders" or “Mini Investors”), whereby the Company issued Convertible Notes (the “Convertible Notes" or “Notes”) in various principal amounts. The notes would bear an interest rate of 10% per annum. Under the convertible note agreements, the lender had the right to convert all or any part of the outstanding and unpaid principal and interest into shares of the Company’s common stock; provided however, that in no event shall the lender be entitled to convert any portion of the notes that would result in the beneficial ownership by it and its affiliates to be more than 9.99% of the outstanding shares of the Company's common stock. The lender exercised this right on September 30, 2016.

 

 

INTELLIGENT CLOUD RESOURCES, INC.

Notes to the Condensed Interim Financial Statements (Unaudited)

 

4.

CONVERTIBLE PROMISSORY NOTES (continued)

 

The key terms/features of the Mini Investors Convertible Notes were as follows:

 

1.

The Holders had the right from and after the date of issuance, and until any time the Notes are fully paid, to convert any outstanding and unpaid principal portion of the Notes, and accrued interest (10% rate), into fully paid and non–assessable shares of Common Stock (par value $.0001).

 

2.

The Notes were convertible at a fixed conversion price of $0.50 or upon default, the lessor of fixed conversion price $0.25 and 100% of 10 trading day low VWAP (default condition).

 

3.

Beneficial ownership is limited to 4.99% initially and upon the Holders request to 9.99%.

 

4.

The Notes could be prepaid in whole or in part, at any time during the period beginning on the issue date and ending on the date which is maturity, beginning at 100% of the outstanding principal, accrued interest and certain other amounts that may be due and owing under the Notes.

 

5.

In the event of default the Convertible Notes would bear interest at 10% per annum and a 0% penalty rate.

 

These Convertible Notes, together with interest accrued on these notes, were converted into 633,332 shares of the Company on September 30, 2016.

 

Outstanding convertible promissory notes as at September 30, 2016 and December 31, 2015 were as follows:

 

Promissory notes issued during 2015		$	95,000
Discount recognized due to embedded derivatives			(2,467	)
Accretion on notes			36
Accreted value of notes as at December 31, 2015			92,569
Accretion on notes during period ended September 30, 2016			2,431
Notes converted during period ended September 30, 2016			(95,000	)
Accreted value of notes as at September 30, 2016			-

 

The embedded conversion features and reset feature in the notes were accounted for as a derivative liability based on FASB guidance (also refer note 5).

 

The details of the convertible promissory notes issued are as follows:

 

Issue date

Maturity date

Note amount $

Interest rate per annum

Conversion rate

December 8, 2015

May 8, 2017

25,000

10

%

Fixed conversion price $0.50; or lessor of fixed conversion price $0.25 and 100% of 10 TD low VWAP (default condition)

December 30, 2015

May 31, 2017

70,000

10

%

Fixed conversion price $0.50; or lessor of fixed conversion price $0.25 and 100% of 10 TD low VWAP (default condition)

95,000

  

Interest expense for the Nine-month period ended September 30, 2016 recognized on these convertible promissory notes amounts to $7,131 included in interest and bank charges in the statements of operations. The interest payable was also converted, together with the principal, into shares of the Company on September 30, 2016.

 

 

INTELLIGENT CLOUD RESOURCES, INC.

Notes to the Condensed Interim Financial Statements (Unaudited)

 

5.

DERIVATIVE LIABILITIES

 

Debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

 

The fair value of the Convertible Notes embedded derivatives as of September 30, 2016 are:

 

		Dec 31, 2015				June 30, 2016				Sept 30, 2016
Notes face value		$	95,000			$	95,000			$	-
Derivative value			2,578				15,329				-
Change in fair value during the period							12,751				(15,329	)

  

A multinomial lattice model was used to value the convertible notes and the embedded derivative liabilities as at December 31, 2015, using the following assumptions:

 

Assumptions		December 31, 2015
Dividend yield			0.00	%
Risk-free rate for term			0.65	%
Volatility			182.5	%
Maturity dates			1.35-1.42 years
Stock Price		$	0.046

 

6.

STOCKHOLDERS’ EQUITY

 

COMMON STOCK - AUTHORIZED

 

As at September 30, 2016, the Company is authorized to issue 100,000,000 shares of common stock, with par value of $0.001.

 

COMMON STOCK - ISSUED AND OUTSTANDING

 

Effective August 31, 2016, the Board of Directors and Shareholders of the Company approved a Certificate of Amendment to its Articles of Incorporation for a 1:15 forward split. As a result, the issued and outstanding shares of common stock of the Company increased from 6,000,000 shares prior to the Forward Split to 90,000,000 shares following the Forward Split. Prior year numbers have been restated from the earliest period presented, to reflect the effect of the forward split.

 

During the Nine-month period ended September 30, 2016, the Company issued 633,332 shares of common stock to holders of convertible notes on conversion of the notes and 233,333 shares to mini investors for cash consideration of $34,970.

 

At September 30, 2016, there were 90,866,665 shares of common stock issued and outstanding (December 31, 2015 - 90,000,000).

 

 

INTELLIGENT CLOUD RESOURCES, INC.

Notes to the Condensed Interim Financial Statements (Unaudited)

 

7.

RELATED PARTY TRANSACTIONS AND BALANCES

 

Transactions are considered to be related party transactions if management has the ability to exercise significant control through its ownership of shares and presence on the board of directors. Transactions with related parties are in the normal course of operations and are recorded at the exchange amount, which is the amount of consideration established and agreed upon by the related parties. The amounts due to stockholders and a related party are unsecured, non-interest bearing and are payable on demand.

 

8.

SUBSEQUENT EVENTS

 

The Company’s management has evaluated subsequent events up to November 7, 2016, the date the condensed interim financial statements were issued, pursuant to the requirements of ASC Topic 855 and has determined that there are no material subsequent events to report.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The information set forth in this Management's Discussion and Analysis of Financial Condition and Results of  Operations (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in our revenue and profitability, (ii) prospective business opportunities and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to our plans, liquidity, ability to complete financing and purchase capital expenditures, growth of our business including entering into future agreements with companies, and plans to successfully develop and obtain approval to market our product. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

 

Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this Quarterly Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.

 

We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.

 

Our revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: the risk of significant natural disaster, the inability of the company to insure against certain risks, inflationary and deflationary conditions and cycles, currency exchange rates, and changing government regulations domestically and internationally affecting our products and businesses.

 

You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this Quarterly Report.

 

US Dollars are denoted herein by “USD”, "$" and "dollars".

 

Overview

 

Intelligent Cloud Resources Inc. (“Intelligent Cloud”) was incorporated on March 27, 2014 under the laws of the State of Nevada as a development stage company. The Company aims to offer cloud enabler and cloud broker services to small and medium sized organizations in Canada and plans to expand to such organizations in the United States in the future. The Company has a strong development team who can build all types of applications on cloud computing and can perform cloud enabler and cloud broker services. Intelligent Cloud Resources will help businesses to break away all of the barriers associated with installing software on to physical hardware by making the software available from anywhere on the globe. For those enterprises that have security concerns for deploying their applications on a public cloud, the Company can also build a private cloud accessible to only those persons who work within the organization.

 

As of the date of this prospectus, neither our website nor any other application has been developed to the point that we can describe specifically its nature or its scope. We have started generating minimal revenue and anticipate an increase in revenue from the sale of our cloud services to companies. Specifically, Intelligent Cloud plans to offer the best quality cloud computing services to the SME (small and medium-sized enterprises) sector of Canada for a monthly service charge and eventually expand such services to this sector in the United States.

 

 

As of the date of this prospectus, the amounts of the prices for our range from $500 and up depending on the complexity of the software. As our platform and services are developed, we will adjust the prices based upon our costs, the prices of competing services and the terms of the contract with our clients.

 

We have limited operational history. We have not yet generated significant revenue and we continue to incur substantial operating loss and an accumulated deficit. These conditions raise substantial doubt about our ability to continue as a going concern.  Our ability to continue as a going concern is dependent upon our ability to develop additional sources of capital, our cloud services, website and other applications, and ultimately, achieve profitable operations.

 

We are currently a development stage company and have just started generating minimal revenue. We do not currently engage in significant business activities that provide cash flow. The contracts we have secured are expected to be an assessment of our current capabilities and will help us determine factors such as how many hours are put in and whether or not we should adjust our prices accordingly. These contracts are still in progress, and are proving to be beneficial and informative experiences. We may require additional capital to implement our business and fund our operations. See “Management’s Discussion and Analysis” on page 10.

 

The Company’s fiscal year end is December 31. The Company’s principal executive office and mailing address is 8717 N. Mattox Rd., C198, Kansas City, MO 64154. Our telephone number is (647) 478-6385.

 

Our Business

 

Plan of Operations

 

Intelligent Cloud has not had significant revenues generated from its business operations since inception. Intelligent Cloud expects that the revenues generated from its business for the next 12 months will not be enough for its required working capital. Until Intelligent Cloud is able to generate any consistent and significant revenue it may be required to raise additional funds by way of equity or debt financing.

 

At any phase, if Intelligent Cloud finds that it does not have adequate funds to complete a phase, it may have to suspend its operations and attempt to raise more money so it can proceed with its business operations. If Intelligent Cloud cannot raise the capital to proceed it may have to suspend operations until it has sufficient capital. Intelligent Cloud expects to raise the required funds for the next 12 months with equity or debt financing.

 

During the next 12 months, management anticipates spending approximately $420,000 on the development, marketing and sales of the Technology. Intelligent Cloud anticipates a product launch in 2017.

 

The estimated breakdown is as follows:

 

Purpose		Amount
Payroll		$	180,000
Research and Development		$	28,000
Marketing		$	57,000
Professional and Consulting Fees		$	50,000
Office Lease Expenses		$	30,000
Travel Expenses		$	20,000
Management and Operational Costs		$	30,000
Miscellaneous Costs		$	25,000
Total		$	420,000

 

 

Results of Operations – Three and Nine months ended September 30, 2016 and 2015 

 

A summary of our operations for the three months ended September 30, 2016 and 2015 is as follows:

 

		Three months ended September 30, 2016				Three months ended September 30, 2015
Revenue		$	-			$	-
Professional Fees			9,272				3,323
Salaries and wages			4,500				-
Interest and Bank Charges			4,090				69
Change in fair value of derivatives			(15,329	)			-
General expenses			200				-
Total Operating Expenses			2,733				3,392
Net Loss		$	2,733			$	3,392

 

A summary of our operations for the nine months ended September 30, 2016 and 2015 is as follows:

 

		Nine months ended September 30, 2016				Nine months ended September 30, 2015
Revenue		$	900			$	-
Professional Fees			28,399				16,324
Salaries and wages			13,559				-
Interest and Bank Charges			9,900				221
Change in fair value of derivatives			(2,578	)			-
General expenses			694				-
Total Operating Expenses			49,974				16,545
Net Loss		$	49,074			$	16,545

 

Revenue

 

The Company has conducted minimal operations since inception. Minimal revenue has been generated by the Company from March 27, 2014 (Inception) to September 30, 2016. The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

Expenses

 

Total operating expenses for the three and nine months ended September 30, 2016 were $2,733 and $49,974 respectively.

 

Operating expenses for the three months ended September 30, 2016 mainly comprised, professional fees of $9,272, salaries and wages amounting to $4,500, with a fair value adjustment on derivatives amounting to ($15,329), and interest and bank charges amounting to $4,090.

 

Operating expenses for the nine months ended September 30, 2016 mainly comprised legal fee amounting to $9,145, bookkeeping and review fee amounting to $11,650 and other filing and edgarization fees amounting to $7,604, all included in Professional Fees above, along with salaries and wages amounting to $13,559, with a fair value adjustment on derivatives amounting to ($2,578), and interest and bank charges amounting to $9,900. 

 

Total operating expenses for the three and nine months ended September 30, 2015 were $3,392 and $16,545, respectively.

 

Operating expenses for the three months ended September 30, 2015 mainly comprised audit and accounting fees amounting to $2,123, and other filing and edgarization fees amounting to $1,200.

  

Operating expenses for the nine months ended September 30, 2015 mainly comprised legal fees amounting to $7,025, audit and review fee amounting to $4,941, edgarization fees amounting to $3,228, and accounting services fee amounting to $1,130.

 

Operating expenses are higher in the nine months ended September 30, 2016 because of the legal expenses in relation to the initial filings, salaries and wages which were not booked in the comparative nine months, fee for bookkeeping and derivative valuation services which were not required in the comparative three months and fair value adjustment on derivatives.

  

The Company has a minimum cash balance available for payment of ongoing operating expenses, has experienced losses from operations, and it does not have a significant source of revenue. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.

 

Net Losses

 

For the nine months ended September 30, 2016 and 2015, the Company had a net loss of $49,074 and $16,545, respectively.

 

 

Liquidity and Capital Resources

 

As of September 30, 2016, the Company had cash of $28,091. The Company’s liabilities as of September 30, 2016 were $42,644, which comprised accrued liabilities amounting to $19,512, an amount of $22,152 due to shareholders, and an amount of $980 due to related parties. As at September 30, 2016, the Company had a working capital deficit of $14,553.

 

As of September 30, 2015, the Company had cash of $74,639. The Company’s liabilities as of September 30, 2015 were $177,307, which comprised accrued liabilities amounting to $76,331, an amount of $4,849 due to shareholders, and an amount of $980 due to related parties, convertible promissory notes amounting to $92,569 and derivative liability of $2,578. As at September 30, 2015, the Company had a working capital deficit of $102,668.

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the nine months ended September 30, 2016 and 2015:

 

		For the nine months ended September 30, 2016 $				For the nine months ended September 30, 2015 $
Net Cash (Used in) Operating Activities			(98,909	)			(6,702	)
Net Cash Used In Investing Activities			-				3,375
Net Cash Provided by Financing Activities			52,273				3,151
Net (Decrease) Increase in Cash and Cash Equivalents			(46,636	)			(176	)

 

The Company has incurred losses since inception and the ability of the Company to continue as a going concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. In order for the Company to meet its liabilities as they become due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.

 

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 resources and possible rejection of our business model and/or sales methods.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis. As of September 30, 2016, we have not generated significant revenues since inception.  We expect to finance our operations primarily through our existing cash, our operations and any future financing.  However, there exists substantial doubt about our ability to continue as a going concern because we will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, our operations would be materially negatively impacted. Therefore, our auditor has substantial doubt as to our ability to continue as a going concern. Our ability to complete additional offerings is dependent on the state of the debt and/or equity markets at the time of any proposed offering, and such market’s reception of the Company and the offering terms. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable.

 

 

Critical Accounting Policies and Estimates

 

Basis of Presentation

 

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the SEC. 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.

 

Our financial statements do not include any comparative information as there were no significant transactions for the nine months ended September 30, 2016.

 

Cash and Cash Equivalents

 

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 

Revenue Recognition

 

The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

Loss per Common Share

 

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the nine months ended September 30, 2016.

 

Estimates

 

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and revenues and expenses for the nine months ended September 30, 2016. Actual results could differ from those estimates made by management.

 

 

Recent Accounting Pronouncements

 

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 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, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable because we are a smaller reporting company.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurances that information required to be disclosed by the Company under the Exchange Act is recorded, processed, summarized and reported, within time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurances that information required to be disclosed by the Company in its periodic reports that are filed under the Exchange Act is accumulated and communicated to our Principal Executive Officer, as appropriate to allow timely decisions regarding financial disclosure.

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective as of September 30, 2015 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.

 

Because of our limited operations, we have limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

Item 1A. Risk Factors.

 

Not required for smaller reporting companies.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Item 6. Exhibits.

 

Exhibit Number		Description
31.1		Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+		Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.INS		XBRL Instance Document
101. PRE		XBRL Taxonomy Extension Presentation Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.SCH		XBRL Taxonomy Extension Schema

 

+ In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 7, 2016

 

Intelligent Cloud Resources, Inc.
/s/ Fatima Khan
Name: Fatima Khan
Chief Executive Officer
(Principal Executive Officer)

 

/s/ Rehan Saeed
Name: Rehan Saeed
Chief Financial Officer
(Principal Financial Officer)

 

 

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