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| ISRBE > SEC Filings for ISRBE > Form 10-Q on 15-Jun-2012 | All Recent SEC Filings |
15-Jun-2012
Quarterly Report
The following discussion and analysis summarizes the significant factors affecting our condensed consolidated results of operations, financial condition and liquidity position for the six months ended March 31, 2012. These financial statements should be read in conjunction with the financial statements of the Company for the year ended September 30, 2011 and notes thereto contained in the information filed as part of the Company's Annual report on Form 10-K, which was filed with the Commission on January 13, 2012. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Forward-Looking Statements
Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission ("SEC").
In some cases, you can identify forward-looking statements by terminology such as ''may,'' ''will,'' ''should,'' ''could,'' ''expects,'' ''plans,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''predicts,'' ''potential,'' or ''continue'' or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Report.
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Plan of Operations
Inspired Builders, Inc., a Nevada Corporation, was located in Boston, Massachusetts. On January 13, 2012, pursuant to the change of control transaction previously disclosed in the Company's filing on Form 10-K dated as of January 13, 2012, we relocated to Santa Monica, California. Until the recent change of control transaction, we focused on repairing and providing home improvements for the homeowners.
Going forward, we expect to redirect the Company's focus to acquiring, investing in, developing and managing real estate properties and related investments. Any such efforts will require substantial financial and management resources, which the Company does not currently possess. Therefore, while we will seek to acquire these resources as a part of our business plans, there can be no assurance of our success, and therefore, in our ability to enter the real estate investment or any other market.
Limited Operating History
We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital and management resources and the risks inherent in making and managing real estate and related investments, among other business risks.
As of August 1, 2011, we limited our operations due to financial constraints of our sole officer and director at that time, Brendan Powderly. Mr. Powderly ceased operating this Company on a full-time basis but continued to operate the business on a part-time basis for a period. On January 13, 2012, we entered into a Securities Purchase Agreement that resulted in a change of control and a new management team assuming responsibilities for the Company.
Results of Operations for the six months ended March 31, 2012
The following table presents the statement of operations for the three and six month period ended March 31, 2012 and March 31, 2011. The discussion following the table is based on these results.
For the Three Months Ended March 31, For the Six Months Ended March 31,
2012 2011 2012 2011
Construction revenue $ - $ 6,377 $ - $ 14,866
Cost of materials and labor - 5,766 - 9,203
Gross margin - 611 - 5,663
OPERATING EXPENSES
Professional fees 159,276 41,071 165,944 46,121
General and administrative 2,103 2,086 2,659 8,022
Total Operating Expenses 161,379 43,157 168,603 54,143
LOSS BEFORE PROVISION FOR INCOME
TAXES (161,379 ) (42,546 ) (168,603 ) (48,480 )
Other expenses
Interest expense 4,509 66 4,609 66
Provision for Income Taxes - - - -
4,509 66 4,609 66
NET LOSS $ (165,888 ) $ (42,612 ) $ (173,212 ) $ (48,546 )
Net loss per share - basic and
diluted $ - $ - $ - $ -
Weighted average number of
shares outstanding during the
period - basic and diluted 11,025,000 11,025,000 11,025,000 11,791,661
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Construction Revenue
Revenue decreased from $6,377 for the three months ended March 31, 2011 to $0 for the three months ended March 31, 2012, a decrease of $6,377.
The decrease in revenue is primarily attributable to the decrease in business and operations resulting from the Company's sole officer and director withdrawing his full-time attention to the Company's business and the change of control transaction.
Operating Expenses
Our total operating expenses increased from $41,071 for the three months ended March 31, 2011 to $159,276 for the three months ended March 31, 2012, a increase of $118,205, or 287.8%.
The increase in operating expenses is primarily attributable to the costs associated with the change of control transaction.
Net Income (Loss)
Net loss increased to a net loss of $(165,888) for the three months ended March 31, 2012 from a net loss of $42,612 for the three months ended March 31, 2011, an increased net loss of $123,276, or 289.3%.
The increase in net loss was primarily due to the costs associated with the change of control transaction.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. We have been funding our operations though the sale of our common stock.
Our primary uses of cash have been for costs of goods for the completion of our home remodeling projects and for the payment of professional legal, accounting and audit fees related to the Company's public reporting requirements. All funds received have been expended in the furtherance of operating the business and establishing our brand and making sure our projects are completed with efficiency and of the highest quality. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
? An increase in working capital requirements to finance any new operations,
? Increases in expenses associated with continuing operations, hiring managers, or contracting with vendors, and
? The cost of being a public company.
Our net revenues are not sufficient to fund our operating expenses. At March 31, 2012, we had a cash balance of $4,697. Since inception, we raised $6,500 from the sale of common stock to fund our operating expenses, pay our obligations, and grow our company. We will be required to raise additional funds in order to continue operations. We estimate that based on current plans and assumptions, that our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. Other than working capital, we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We will need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate that our existing business will be profitable in 2012. Therefore our future operations will be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.
We have had to limit our operations further due to our sole officer and director withdrawing his full-time attention to the Company's business. Mr. Powderly has ceased operating this Company on a full-time basis.
Over the next twelve months, we hope to create a new business plan with a new management team and additional capital resources. But, without additional capital and a new management team, we believe that we may not be able to continue to pursue our business operations. As a result of the foregoing, we will focus the Company's efforts towards these objectives.
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.
Critical Accounting Policies and Estimates
We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.
Revenue recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. For all revenue sources discussed below, in accordance with ASC 605-45 "Principal Agent Considerations", we recognize revenue net of amounts retained by third party entities pursuant to revenue sharing agreements. Our specific revenue recognition policies are as follows:
We recognize revenue from the acceptance of a home remodeling contract and the signing of the contract when the project is completed and collection is reasonably assured.
Stock-based compensation
We account for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. There were no options outstanding as of September 30, 2010. We account for non-employee share-based awards in accordance with ASC Topic 505-50.
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the interim and annual reporting period beginning January 1, 2011. We will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on our financial statements.
In August 2010, the FASB issued an exposure draft on lease accounting that would require entities to recognize assets and liabilities arising from lease contracts on the balance sheet. The proposed exposure draft states that lessees and lessors should apply a "right-of-use model" in accounting for all leases. Under the proposed model, lessees would recognize an asset for the right to use the leased asset, and a liability for the obligation to make rental payments over the lease term. The lease term is defined as the longest possible term that is "more likely than not" to occur. The accounting by a lessor would reflect its retained exposure to the risks or benefits of the underlying leased asset. A lessor would recognize an asset representing its right to receive lease payments based on the expected term of the lease. Comments on this exposure draft were due by December 15, 2010 and the final standard is expected to be issued in the second quarter of 2011. The Company believes that the proposed standard, as currently drafted, will have neither a material impact on its reported financial position and reported results of operations, nor a material impact on the liquidity of the Company.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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