Guskin Gold Corp. - Quarter Report: 2020 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: March 31, 2020
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: ________________
INSPIRED BUILDERS, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 27-1989147 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
3445 Lawrence Ave., Oceanside, NY 11572
(Address of principal executive offices, Zip Code)
(646) 768-8417
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company |
☒ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
The number of shares of registrant’s common stock outstanding as of April 27, 2020 was 1,011,254.
FORM 10-Q
INSPIRED BUILDERS, INC.
March 31, 2020
TABLE OF CONTENTS
i
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 10-K which was filed with the SEC on November 12, 2019 (the “10-K”), in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
ii
CONDENSED BALANCE SHEETS
| March 31, 2020 (Unaudited) | September 30, 2019 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | - | $ | 101 | ||||
| Total current assets | - | 101 | ||||||
| TOTAL ASSETS | $ | - | $ | 101 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and Accrued Expenses | 3,587 | 20,364 | ||||||
| Loan and Notes payable – Related Party | 67,360 | 5,762 | ||||||
| Total current liabilities | 70,947 | 26,126 | ||||||
| Commitments and Contingencies (See Note 6) | - | - | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, par value $0.001 per share; 5,000,000 shares authorized; none shares issued and outstanding at March 31, 2020 and September 30, 2019, respectively | - | - | ||||||
| Common stock, par value $0.001 per share; 250,000,000 shares authorized; 1,011,254 shares issued and outstanding at March 31, 2020 and September 30, 2019, respectively | 1,011 | 1,011 | ||||||
| Additional paid in capital | 1,486,849 | 1,486,849 | ||||||
| Accumulated deficit | (1,558,807 | ) | (1,513,885 | ) | ||||
| Total stockholders' deficit | (70,947 | ) | (26,025 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | - | $ | 101 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended | For the six months ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Operating expenses | ||||||||||||||||
| General and Administrative expenses | 12,353 | 13,333 | 48,116 | 35,081 | ||||||||||||
| Total operating expense | 12,353 | 13,333 | 48,116 | 35,081 | ||||||||||||
| Loss from operations | (12,353 | ) | (13,333 | ) | (48,116 | ) | (35,081 | ) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Cancellation of debt income from write off of debt | - | - | 3,194 | - | ||||||||||||
| Interest expense | - | (31 | ) | - | (63 | ) | ||||||||||
| Total other income (expenses) | - | (31 | ) | 3,194 | (63 | ) | ||||||||||
| Net loss | $ | (12,353 | ) | $ | (13,364 | ) | $ | (44,922 | ) | $ | (35,144 | ) | ||||
| Net loss per common share – basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.03 | ) | ||||
| Weighted average common shares outstanding – basic and diluted | 1,011,254 | 1,011,254 | 1,011,254 | 1,011,254 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2020 AND MARCH 31, 2019
(Unaudited)
Statement of Stockholders’ Deficit for the Six Months ended March 31, 2020
| Common Stock: Shares | Common Stock: Amount | Additional Paid in Capital | Accumulated Deficit | Totals | ||||||||||||||||
| Balance – September 30, 2019 | 1,011,254 | $ | 1,011 | $ | 1,486,849 | $ | (1,513,885 | ) | $ | (26,025 | ) | |||||||||
| Net loss | - | - | - | (32,569 | ) | (32,569 | ) | |||||||||||||
| Balance December 31, 2019 (Unaudited) | 1,011,254 | $ | 1,011 | $ | 1,486,849 | $ | (1,546,454 | ) | $ | (58,594 | ) | |||||||||
| Net loss | - | - | - | (12,353 | ) | (12,353 | ) | |||||||||||||
| Balance March 31, 2020 (Unaudited) | 1,011,254 | $ | 1,011 | $ | 1,486,849 | $ | (1,558,807 | ) | $ | (70,947 | ) | |||||||||
Statement of Stockholders’ Deficit for the Six Months ended March 31, 2019
| Common Stock: Shares | Common Stock: Amount | Additional Paid in Capital | Accumulated Deficit | Totals | ||||||||||||||||
| Balance – September 30, 2018 | 1,011,254 | $ | 1,011 | $ | 1,451,949 | $ | (1,455,520 | ) | $ | (2,560 | ) | |||||||||
| Capital Contribution | - | - | 4,800 | - | 4,800 | |||||||||||||||
| Net loss | - | - | - | (21,780 | ) | (21,780 | ) | |||||||||||||
| Balance December 31, 2018 (Unaudited) | 1,011,254 | $ | 1,011 | $ | 1,456,749 | $ | (1,477,300 | ) | $ | (19,540 | ) | |||||||||
| Capital Contributions | 30,100 | 30,100 | ||||||||||||||||||
| Net loss | - | - | - | (13,364 | ) | (13,364 | ) | |||||||||||||
| Balance March 31, 2019 (Unaudited) | 1,011,254 | $ | 1,011 | $ | 1,486,849 | $ | (1,490,664 | ) | $ | (2,804 | ) | |||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| CASHFLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (44,922 | ) | $ | (35,144 | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Write off of related party loans | (3,194 | ) | - | |||||
| Changes in net operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | (16,083 | ) | 8,564 | |||||
| NET CASH USED IN OPERATING ACTIVITIES | (64,699 | ) | (26,580 | ) | ||||
| CASHFLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from Related party loans | 73,439 | 3,262 | ||||||
| Payment on Related party loans | (9,341 | ) | ||||||
| Contribution of Capital | - | 34,900 | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 64,098 | 38,162 | ||||||
| NET (DECREASE) INCREASE IN CASH | (101 | ) | 11,582 | |||||
| CASH – BEGINNING OF PERIOD | 101 | 3,647 | ||||||
| CASH – END OF PERIOD | $ | - | $ | 15,229 | ||||
| SUPPLEMENTAL CASHFLOW INFORMATION: | ||||||||
| Cash paid for: | ||||||||
| Income tax | $ | - | $ | - | ||||
| Interest | $ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 2020
(Unaudited)
Note 1 – Organization and basis of accounting
Basis of Presentation and Organization
Inspired Builders, Inc. (the “Company”) was incorporated in the State of Nevada in February 2010. Until August 15, 2017 the Company was directing its focus on acquiring, investing in, developing and managing real estate properties and related investments. On August 15, 2017, pursuant to a change in control transaction, we relocated to Miami, Florida and ceased all operations as a real estate company. On February 15, 2018, Inspired Builders (the “Company”), the majority shareholders of the Company (the “Sellers”) and Santa Alba, LLC (the “Purchaser”) entered into a stock purchase agreement (the “Stock Purchase Agreement”), whereby the Purchaser purchased from the Sellers 956,440 shares of common stock, par value $0.001 per share, of the Company (the “Shares”), representing approximately 94.58% of the issued and outstanding shares of the Company, for an aggregate purchase price of $300,000 (the “Purchase Price”). On February 15, 2018, the closing of the transaction occurred (“Closing Date”). Also, in connection therewith, Scott Silverman, the Company’s sole officer and Director, resigned from his positions and named Kai Ming Zhao as sole director and to the positions of CEO, CFO, Chief Accounting Officer and Secretary.
On January 16, 2020, Santa Alba, LLC sold the 956,440 shares of common stock to Custodian Ventures, LLC for an aggregate purchase price of $145,000. At this point there was a change of control of the Company and Kai Ming Zhao resigned as President, Secretary, Treasurer and Director and David Lazar was appointed as President, Secretary, Treasurer and Director.
The Company's current business objective is to seek a business combination with an operating company. We intend to use the Company's limited personnel and financial resources in connection with such activities. The Company will utilize its capital stock, debt or a combination of capital stock and debt, in effecting a business combination. It may be expected that entering into a business combination will involve the issuance of restricted shares of capital stock.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information necessary for a comprehensive presentation of financial position and results of operations. The unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on form 10-K for the year ended September 30, 2019, filed with the SEC on November 12, 2019. The interim results for the period ended March 31, 2020 are not necessarily indicative of expected results for the full fiscal year. It is management’s opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation.
Note 2 – Summary of significant accounting policies
Cash and Cash Equivalents
For purposes of reporting within the statements 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.
Earnings (Loss) per Share
In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. As of March 31, 2020 and 2019, the Company did not have any outstanding dilutive securities, respectively.
5
Income Taxes
The Company adopted FASB ASC 740, Income Taxes, at its inception. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the 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, including tax loss and credit carryforwards, 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. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. No deferred tax assets or liabilities were recognized as of March 31, 2020 and September 30, 2019 respectively.
Use of Estimates
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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Effective October 1, 2018, the Company adopted the guidance of ASC 606, Revenue from Contracts. The implementation of ASC 606 did not have a material impact on the Company’s financial statements. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The adoption of ASC 606 had no effect on previously reported balances.
We have no source of revenue as we are currently a shell company which is moving forward with the business of identifying and entering into a business combination with a privately held business or company. As such, we recognize no revenue.
Fair Value of Financial Investments
The fair value of cash and cash equivalents, accounts payable, accrued liabilities, and loans and notes payable approximates the carrying amount of these financial instruments due to their short-term maturity.
Recent Accounting Pronouncements
In July 2018, the FASB issued accounting standard update (“ASU”) No. 2017-02, “Leases (Topic 842)”, (“ASU 2017-02”) and ASU 2018-10, “Leases (Topic 842)”, (“ASU 2018-10”), respectively. These ASU’s require that an entity should recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term. This guidance also provides accounting updates with respect to lessor accounting under a lease arrangement. This new lease guidance is effective for fiscal years beginning after December 15, 2018. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. Early adoption is permitted for all entities. The Company currently leases no equipment or property, and therefore, the adoption on October 1, 2019 of the new standard has no effect on the Company’s financial statements.
Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements.
6
Note 3 – Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $44,922, an accumulated deficit of $1,558,807 and working capital deficit of $70,947 as of March 31, 2020. In addition, the Company has not had revenues since May 2011 and has relied on the support of its Chief Executive Officer and majority shareholder. A withdrawal of this support, for any reason, will have a material adverse effect on the Company’s financial position and its operations. If the Company does not begin to generate sufficient revenue or raise additional funds through a financing, the Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. There are currently no plans or agreements in place to provide such funding. The Company will require additional funding to finance the growth of its future operations as well as to achieve its strategic objectives. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and generate revenue. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The COVID-19 pandemic could have an impact on our ability to obtain financing to fund the operations. The Company is unable to predict the ultimate impact at this time.
Note 4 – Related Party Transactions
On January 16, 2020, Santa Alba, LLC sold the 956,440 shares of common stock to Custodian Ventures, LLC for an aggregate purchase price of $145,000. At this point there was a change of control of the Company and Kai Ming Zhao resigned as President, Secretary, Treasurer and Director and David Lazar was appointed as President, Secretary, Treasurer and Director.
During the period October 1, 2019 thru January 16, 2020, Kai Ming Zhao advanced a total of $6,079 to the Company to pay operating expenses. During the six months ended March 31, 2020, the loan balance of $9,341 was fully repaid. As of March 31, 2020, the Company had a loan payable remaining of $0 to Kai Ming Zhao.
During the period January 17, 2020 thru March 31, 2020, Custodian Ventures, LLC, a majority shareholder and an entity controlled by our Chief Executive Officer advanced a total of $67,360 to the Company to pay operating expenses. As of March 31, 2020, the Company had a loan payable remaining of $67,360 to Custodian Ventures, LLC. This loan is unsecured, non-interest bearing, and payable upon demand.
Note 5 – Loans and Notes payable – Related Parties
On January 13, 2012, the Company entered into a 12-month unsecured promissory note in the amount of $211,000. Interest accrues in arrears on the outstanding principal at the rate of ten percent (10.00%) per annum. Interest shall be payable on the last day of each quarter, commencing March 30, 2012, and continuing until the maturity date. Should the maker fail to pay the entire principal and accrued interest by the maturity date, the maker agrees that the interest rate shall increase to twelve percent (12.00%) per annum. On May 10, 2013, the Company and the related party agreed to extend the maturity of the loan for an additional year or until January 13, 2014. The loan maturity dates were further extended to January 13, 2016. On May 22, 2012, the Company borrowed an additional $32,714 from the related party, with the same terms, the loan maturity dates were extended to January 13, 2016. On September 17, 2012, the Company borrowed an additional $22,032 from the related party, with the same terms, the loan maturity dates were extended to January 13, 2016. On February 7, 2013, the Company borrowed an additional $28,773 from the related party, with the same terms, and on July 31, 2013, the Company borrowed an additional $30,000 from the related party, with the same terms. The loans maturity dates were further extended to February 7, 2016 and July 31, 2016, respectively. On December 20, 2013, the Company borrowed $2,500, on January 7, 2014, the Company borrowed $5,000, on February 6, 2014, the Company borrowed $5,520, the loans maturity dates were further extended to December 20, 2015 and January 7, 2016. On February 17, 2014, the Company borrowed $4,400 and on June 26, 2014, the Company borrowed $3,080, the loans maturity dates were further extended to February 6, 2016 and February 17, 2016, respectively. On November 15, 2016, the Company and the related party entered into a Release and Settlement Agreement whereby $342,519 in principal and $149,258 in accrued interest was forgiven. The transaction was accounted for as contributed capital. On December 31, 2019, the Company obtained a legal opinion that the note payable for $2,500 was no longer collectible under the statute of limitations in the State of California, the jurisdiction where the note was written. As a result, the principal amount of $2,500 and accrued interest of $694 was written off and accounted for as Cancellation of Debt Income. The total outstanding principal at March 31, 2020 and December 31, 2019 amounted to $0 and $0, respectively. Accrued interest at March 31, 2020 and December 31, 2019, amounted to $0 and $0, respectively.
During the period October 1, 2019 thru January 16, 2020, Kai Ming Zhao advanced a total of $6,079 to the Company to pay operating expenses. During the six months ended March 31, 2020, the loan balance of $9,341 was fully repaid. As of March 31, 2020, the Company had a loan payable remaining of $0 to Kai Ming Zhao.
During the period January 17, 2020 thru March 31, 2020, Custodian Ventures, LLC, a majority shareholder and an entity controlled by our Chief Executive Officer advanced a total of $67,360 to the Company to pay operating expenses. As of March 31, 2020, the Company had a loan payable remaining of $67,360 to Custodian Ventures, LLC. This loan is unsecured, non-interest bearing, and payable upon demand.
7
Note 6 – Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
Note 7 – Concentration of Credit Risk
The Company relies heavily on the support of its president and majority shareholder. A withdrawal of this support, for any reason, will have a material adverse effect on the Company’s financial position and its operations.
Note 8 – Common Stock
As of March 31, 2020 1,011,254 shares of common stock with par value of $0.001 remains outstanding.
Note 9 – Subsequent Events
During April 2020, Custodian Ventures, LLC, a majority shareholder and an entity controlled by our Chief Executive Officer advanced a total of $1,000 to the Company to pay operating expenses. This loan is unsecured, non-interest bearing, and payable upon demand.
In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have had a minimal impact on our day to day operations. However this could impact our efforts to enter into a business combination as other businesses have had to adjust, reduce or suspend their operating activities. The extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. The Company is unable to predict the ultimate impact at this time.
8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Development
Inspired Builders, Inc. (the “Company”) was incorporated in the State of Nevada in February 2010. Until August 15, 2017 the Company was directing its focus on acquiring, investing in, developing and managing real estate properties and related investments. On August 15, 2017, pursuant to a change in control transaction, we relocated to Miami, Florida and ceased all operations as a real estate company. On February 15, 2018, Inspired Builders (the “Company”), the majority shareholders of the Company (the “Sellers”) and Santa Alba, LLC (the “Purchaser”) entered into a stock purchase agreement (the “Stock Purchase Agreement”), whereby the Purchaser purchased from the Sellers 956,440 shares of common stock, par value $0.001 per share, of the Company (the “Shares”), representing approximately 94.58% of the issued and outstanding shares of the Company, for an aggregate purchase price of $300,000 (the “Purchase Price”). On February 15, 2018, the closing of the transaction occurred (“Closing Date”). Also, in connection therewith, Scott Silverman, the Company’s sole officer and Director, resigned from his positions and named Kai Ming Zhao as sole director and to the positions of CEO, CFO, Chief Accounting Officer and Secretary.
On January 16, 2020, Santa Alba, LLC sold the 956,440 shares of common stock to Custodian Ventures, LLC for an aggregate purchase price of $145,000. At this point there was a change of control of the Company and Kai Ming Zhao resigned as President, Secretary, Treasurer and Director and David Lazar was appointed as President, Secretary, Treasurer and Director.
The Company's current business objective is to seek a business combination with an operating company. We intend to use the Company's limited personnel and financial resources in connection with such activities. The Company will utilize its capital stock, debt or a combination of capital stock and debt, in effecting a business combination. It may be expected that entering into a business combination will involve the issuance of restricted shares of capital stock. The issuance of additional shares of our capital stock:
| ● | may significantly reduce the equity interest of our stockholders; |
| ● | will likely cause a change in control if a substantial number of our shares of capital stock are issued, and most likely will also result in the resignation or removal of our present officer and director; and |
| ● | may adversely affect the prevailing market price for our common stock. |
Similarly, if we issued debt securities, it could result in:
| ● | default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenants were breached without a waiver or renegotiations of such covenants; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and |
| ● | our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such security was outstanding. As of the date of this report, the Company has not entered into any business combination, debt or equity transaction. |
The Company’s fiscal year end is September 30.
In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have had a minimal impact on our day to day operations. However this could impact our efforts to enter into a business combination as other businesses have had to adjust, reduce or suspend their operating activities. The extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. The Company is unable to predict the ultimate impact at this time.
9
Results of Operations
For the Three months ended March 31, 2020 compared to the Three months ended March 31, 2019.
Operating Expenses
For the three months ended March 31, 2020, we incurred operating expenses of $12,353 as compared to $13,333 for the comparable period in 2019, which remains fairly consistent year over year.
Net Loss
For the three months ended March 31, 2020 we incurred a net loss of $12,353 as compared to $13,364 for the comparable period in 2019, which remains fairly consistent year over year.
For the Six months ended March 31, 2020 compared to the Six months ended March 31, 2019.
Operating Expenses
For the six months ended March 31, 2020, we incurred operating expenses of $48,116 as compared to $35,081 in 2019. Increase was attributable to increased costs related to the change of control transaction.
Net Loss
For the six months ended March 31, 2020 we incurred a net loss of $44,922 as compared to a net loss of $35,144 for the comparable period in 2019. Increase was attributable to increased costs related to the change of control transaction.
Liquidity and Capital Resources
As of March 31, 2020, the Company has no business operations and no cash resources other than advances provided by a related party. As of March 31, 2020 we had $0 in cash and a working capital deficit of $70,947. We had a negative cash flow from operations of $64,699 during the six months ended March 31, 2020. We financed our negative cash flow from operations during the six months ended March 31, 2020 through advances made by a related party.
The Company does not currently engage in any business activities that provide cash flow. During the next 12 months we anticipate incurring costs related to:
| ● | filing of Exchange Act reports. |
| ● | registered agent fees, legal fees and accounting fees, and |
| ● | investigating, analyzing and consummating an acquisition or business combination. |
We estimate that these costs will be in the range of twenty to twenty-five thousand dollars per year. The Company has not had revenues since May 2011 and to date, has relied on the support of its president and majority shareholder. A withdrawal of this support, for any reason, will have a material adverse effect on the Company’s financial position and its operations. If the Company does not begin to generate revenue or raise additional funds through a financing, the Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. There are currently no plans or agreements in place to provide such funding. The Company will require additional funding to finance the growth of its future operations as well as to achieve its strategic objectives. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and generate revenue. Our unaudited condensed financial statements have been prepared on the basis that we will continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Our independent registered public accounting firm has included its audit report to the audited financial statements for the years ended September 30, 2019 and 2018 stating substantial doubt about our ability to continue as a going concern.
The COVID-19 pandemic could have an impact on our ability to obtain financing to fund the operations. The Company is unable to predict the ultimate impact at this time.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
We did not have any contractual obligations.
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Critical Accounting Policies
Our significant accounting policies are described in the notes to our condensed financial statements for the six months ended March 31, 2020, and are included elsewhere in this report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Pursuant to Rule 13a-15(b) under the 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 the Company’s Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of March 31, 2020. Based upon that evaluation, the Company’s CEO concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2020 due to the Company’s limited internal resources and lack of ability to have segregation of duties and multiple levels of transaction review.
Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in the reports that we file or submit under the Exchange Act have been recorded, processed, summarized and reported accurately. Our management intends to develop procedures to address the current deficiencies to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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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.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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.
None.
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The following exhibits are included with this report.
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) | |
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Schema Document | |
| 101.CAL | XBRL Calculation Linkbase Document | |
| 101.DEF | XBRL Definition Linkbase Document | |
| 101.LAB | XBRL Label Linkbase Document | |
| 101.PRE | XBRL Presentation Linkbase Document |
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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.
| INSPIRED BUILDINGS, INC. | ||
| Date: April 29, 2020 | By: | /s/ David Lazar |
| David Lazar, Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial and accounting officer) | ||
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