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BKSHF > SEC Filings for BKSHF > Form 10-Q on 17-Jul-2013All Recent SEC Filings

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Form 10-Q for BERKSHIRE HOMES, INC.


17-Jul-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Description of Business

Overview

We were incorporated in the State of Nevada on June 2, 2010 under the name "Indigo International, Corp."

Since November 2012, our business strategy has been focused on the acquisition and rehabilitation of distressed residential real estate in the United States. On December 4, 2012, our majority shareholder, who is our sole officer and director, approved an amendment to our Articles of Incorporation for the purpose of changing our name to "Berkshire Homes, Inc."

Our corporate offices are located at 2375 East Camelback Road, Suite 600, Phoenix, AZ 85016. Our telephone number is 602-387-5393.

On January 11, 2013, we filed an Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada in order to, among other things, change our authorized capital stock to Five Hundred and Twenty Million (520,000,000) shares, consisting of Five Hundred Million (500,000,000) shares of Common Stock, $0.0001 par value per share and Twenty Million (20,000,000) shares of "blank-check" Preferred Stock, $0.0001 par value per share.

Recent Developments

In June 2013 we sold an aggregate of $2,650,000 of our 5% unsecured promissory notes (the "5% Notes") for gross proceeds to us of $2,650,000. The 5% Notes accrued interest at the rate of 5% per annum are due and payable twenty four months from their respective dates of issuance, subject to acceleration in the event of default and the 5% Notes may be prepaid, in whole or in part, without penalty or premium.


On July 9, 2013, we issued 6,250,000 shares of our Common Stock to the holder of four 16% promissory notes (the "16% Notes") with an aggregate principal amount of $500,000 pursuant to the terms of a Conversion Agreement. Pursuant to the terms of the Conversion Agreement, the holder of the 16% Notes agreed to convert all accrued but unpaid interest on the 16% Notes as of July 9, 2013, into 6,250,000 shares of our Common Stock.

Results of Operations

We are a development stage company incorporated on June 2, 2010. From our inception to May 31, 2013, we generated revenues of $22,000 and accumulated a deficit of $1,132,418 from our prior consultation business which ceased in November 2012. We cannot guarantee we will be successful in developing and expanding our business. Our business is subject to risks inherent in the establishment of a new business enterprise including limited capital resources.

We anticipate that we will continue to incur losses in the next 12 months. Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional financing to meet our long term operating requirements through the sale of equity and/or debt securities among other options.

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

Three Months Ended May 31, 2013 Compared to Three Months Ended May 31, 2012

Our net loss for the three months ended May 31, 2013 was $65,150, a decrease of $129,720 or 67% from a net loss of $194,870 during the three months ended May 31, 2012. The decrease was due to reduced consulting fees, professional fees and general and administrative expenses.

During the three months ended May 31, 2013 and May 31, 2012, we generated no revenues.

During the three months ended May 31, 2013, we incurred operating expense of $45,800, a decrease of $140,238 or 75.4% from $186,038 during the three months ended May 31, 2012. Our general and administrative expenses decreased by $25,066 or 79.6% from $31,472 for the three months ended May 31, 2012 to $6,406 for the three months ended May 31, 2013 as we streamlined our operations in 2013. Professional fees decreased from $29,363 for the three months ended May 31, 2012 by $27,469 or 93.5% to $1,894 for the three months ended May 31, 2013. Management fees decreased from $57,659 for the three months ended May 31, 2012 by $20,159 or 35.0% to $37,500 for the three months ended May 31, 2013 as a result of a reduced management fee agreement with the new officer.

During the three months ended May 31, 2013 we incurred interest expense of $19,350 on our outstanding promissory notes with total principal amount of $500,000. During the three months ended May 31, 2012, we incurred interest expense of $8,832 on outstanding promissory notes with total principal amount of $400,000.

Six Months Ended May 31, 2013 Compared to Six Months Ended May 31, 2012

Our net loss for the six months ended May 31, 2013 was $153,075, a decrease of $142,302 or 48.2% from a net loss of $295,377 during the six months ended May 31, 2012. The decrease was due to lower consulting, professional, management and general and administrative costs.

During the six months ended May 31, 2013 and May 31, 2012, we generated no revenues.


During the six months ended May 31, 2013, we incurred operating expense of $116,675, a decrease of $167,547 or 58.9% from $284,222 during the six months ended May 31, 2012. Our general and administrative expenses decreased by $32,469 or 59.3% from $54,768 for the six months ended May 31, 2012 to $22,299 for the six months ended May 31, 2013 as we streamlined our operations in 2013. Professional fees increased from $35,613 for the six months ended May 31, 2012 by $7,763 or 21.8% to $43,376 for the six months ended May 31, 2013, largely due to increased legal costs. Management fees decreased from $109,422 for the six months ended May 31, 2012 by $59,422 or 54.3% to $50,000 for the six months ended May 31, 2013 as a result of reduced compensation for arrangements for the new officer.

During the six months ended May 31, 2013, we incurred interest expense of $36,400 on our outstanding promissory notes with a total principal amount of $500,000. During the six months ended May 31, 2012, we incurred interest expense of $11,155 on outstanding promissory notes with total principal amount of $400,000.

Liquidity and Capital Resources

As of May 31, 2013, we had current assets of $9,542 and current liabilities of $1,118,360.

As of November 30, 2012, we had no assets and current liabilities of $955,743.

We financed our operations during the six months ended May 31, 2013 primarily through the sale of an additional $100,000 promissory note. We have financed our operations during the six months ended May 31, 2012 primarily with the sale of three promissory notes we issued during the period for total proceeds to us of $400,000.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through further issuances of equity securities or debt financing. Our working capital requirements are expected to increase in line with the growth of our business.

We have generated $22,000 in revenues to date. We are still a development stage corporation.

Over the next twelve months we believe we will need $2,500,000 to carry out our ongoing operations and to expand our operations which will come from funds currently available and additional financing.

Recent Accounting Pronouncements

See Note 1 to the Financial Statements.

Off-balance Sheets Arrangements

As of the date of this Quarterly Report, 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.


Going Concern

We have funded our initial operations through the issuance of 4,510,000 shares of capital stock for net proceeds of $23,600, the sale of six promissory notes in the aggregate principal amount of $3,150,000, and cash proceeds of $22,000 generated from providing consulting service from inception to date. Due to the uncertainty of our ability to generate sufficient revenues from our operating activities and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, in their report on our financial statements for the fiscal year ended November 30, 2012, our registered independent auditors included additional comments indicating concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our registered independent auditors. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management plans to continue to seek financing on favorable terms; however, there is no assurance that such financing can be obtained on favorable terms. If we are unable to generate sufficient revenue or obtain additional funds for our working capital needs, we may need to cease or curtail operations.

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