INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed
Notes
to the Financial Statements (Unaudited)
June 30, 2013
NOTE 1 - ORGANIZATION AND HISTORY
Infrastructure
Developments
Corp.
(the
“Company”),
formerly
1
st
Home
Buy
and
Sell
Ltd.,
was
incorporated
under
the
laws
of
the
state
of
Nevada
on
August
10,
2006.
The
Company
changed
its name to “Infrastructure Developments Corp.” on March 1, 2010.
On April 14, 2010, the Company and Interspec International, Inc. (“Interspec”, formerly Intelspec
International, Inc.), a Nevada corporation, engaged in engineering, construction, and project
management
executed
a
stock
exchange
agreement,
whereby
the
Company
agreed
to
acquire
100%
of
the
issued
and
outstanding
shares
of
Interspec
in
exchange
for
14,000,000
shares
of
the
Company’s common stock. Because the owners of Interspec became the principal shareholders of
the
Company
through
the
transaction,
Interspec
is
considered
the
acquirer
for
accounting
purposes and this transaction is accounted for as a reverse acquisition or recapitalization of
Interspec.
The
Company
is
a
global
engineering
and
project
management
business
that
provides
services
through
a
network
of
branch
offices
and
subsidiaries
located
in
markets
where
the
Company
either has active projects, is bidding on projects, or is investigating project opportunities.
NOTE 2 – GOING CONCERN
The
accompanying
consolidated
financial statements
have
been
prepared
on
a
going
concern
basis, which contemplates the realization of assets and liabilities in the normal course of business.
Accordingly,
they do
not
include
any adjustments relating to
the
realization
of
the
carrying
value
of assets or the amounts and classification of liabilities that might be necessary should the
Company
be
unable
to
continue
as
a
going
concern.
The
Company
has
accumulated
losses
and
working capital
and cash flows
from operations
are
negative
which
raises
doubt
as
to the validity
of the going concern assumptions. These financials do not include any adjustments to the carrying
value
of
the
assets
and
liabilities,
the
reported
revenues
and
expenses
and
balance
sheet
classifications
used
that
would
be
necessary
if
the
going
concern
assumption
were
not
appropriate; such adjustments could be material.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
a.
Principles of Consolidation
The
consolidated
financial
statements
herein
include
the
operations
of
Intelspec
and
the
consolidated
operations
of
the
Company
and
its
wholly-owned
subsidiaries.
All
intercompany
transactions and balances have been eliminated in consolidation.
b.
Cash and Cash Equivalents
The
Company considers
all
highly liquid
investments
with
original
maturities
to
the
Company of
three months or less to be cash equivalents.
7
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
June 30, 2013
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
c.
Accounts Receivable
Accounts
receivable
are
carried
at
original
invoice
amount
less
an
estimate
made
for
doubtful
receivables
based
on
a
review
of
all
outstanding
amounts
on
a
monthly
basis.
Specific
reserves
are
estimated
by
management
based
on
certain
assumptions
and
variables,
including
the
customer’s
financial
condition,
age
of
the
customer’s
receivables,
and
changes
in
payment
histories. Trade receivables are written off when deemed uncollectible. Recoveries of trade
receivables previously written off are recorded when received.
A
trade
receivable
is
considered
to
be
past
due
if
any
portion
of
the
receivable
balance
has
not
been
received
by
the
contractual
pay
date.
Interest
is
not
charged
on
trade
receivables
that
are
past due.
d.
Property and Equipment
Property
and
equipment
are
recorded
at
cost,
less
accumulated
depreciation.
Depreciation
and amortization
on
capital
leases
and
property
and
equipment
are
determined
using
the
straight
line method over the estimated useful lives (usually
ten years) of the assets or terms of the leases.
Expenditures
for
maintenance
and repairs
are
expensed
when
incurred
and
betterments
are
capitalized. Gains and losses on the sale of property and equipment are reflected in operations.
e.
Revenue Recognition
Revenues from Sales and Services consist of revenues earned in the Company’s activity
as
Project
&
Construction
Equipment
Management
&
Operations,
and
misc.
services
provided.
All
Sales/Service
revenue
is
recognized
when
the
sale/service
is
complete
and
the
Company
has
determined that the sale/service proceeds are collectible.
f.
Stock Based Compensation
The Company adopted SFAS No. 123-R effective January 1, 2006 using the modified prospective
method.
Under
this
transition
method,
stock
compensation
expense
includes
compensation
expense for all stock-based compensation awards granted on or after January 1,2006, based on the
grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R.
The Company issued
no compensatory options to
its
employees
during the
period ended June
30,
2013.
8
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
June 30, 2013
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
g.
Foreign Exchange
The
Company’s
reporting
currency is
the
United
States
dollar.
The
Company’s
functional
currency
is
also
the
U.S.
Dollar.
(“USD”)
Transactions
denominated
in
foreign
currencies
are
translated into USD and recorded at the foreign exchange rate prevailing
at the date of the
transaction.
Monetary assets
and liabilities
denominated
in
foreign
currencies,
which
are stated
at
historical
cost,
are
translated
into
USD
at
the
foreign
exchange
rates
prevailing
at
the
balance
sheet date. Realized and unrealized foreign exchange differences arising on translation
are recognized in the income statement.
h.
Advertising
The
Company
expenses
the
cost
of
advertising
as
incurred.
For
the
period
ended
June
30,
2013,
the Company had no advertising expenses.
i.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under the asset and
liability
method,
deferred
tax
assets
and
liabilities
are
recognized
for
future
tax
consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities
and
their
respective
tax
bases.
Deferred
tax
assets
and
liabilities
are
measured
using
enacted
tax
rates
expected
to
apply
to
taxable
income
in
the
years
in
which
those
temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the enactment date.
j.
Income per Common Share
The
computation
of
basic
earnings
per
common
share
is
based
on
the
weighted
average
number
of shares outstanding during each
year. The computation of diluted earnings per common share is
based
on
the
weighted
average
number
of
shares
outstanding
during
the
year,
plus
the
common
stock
equivalents
that
would
arise
from
the
exercise
of
stock
options
and
warrants
outstanding,
using the treasury stock method and the average market price per share during the year.
k.
Impairment of Long-Lived Assets
The
Company
reviews
long-lived
assets
such
as
property,
equipment,
investments
and
definite-
lived intangibles for impairment annually
and whenever events or changes in circumstances
indicate
that
the
carrying
value
of
an
asset
may not
be
recoverable.
As
required
by
Statement
of
Financial
Accounting
Standards No. 144, the
Company
uses
an
estimate
of
the
future
undiscounted net
cash flows
of the related asset or
group of assets over their remaining economic
useful
lives
in
measuring
whether
the
assets
are
recoverable.
If
the
carrying
amount
of
an
asset
exceeds
its
estimated
future
cash
flows,
an
impairment
charge
is
recognized
for
the
amount
by
which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived
assets
is
assessed
at the lowest
levels
for which there
are
identifiable cash flows
that
are
independent of other groups of assets.
9
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
June 30, 2013
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
k.
Impairment of Long-Lived Assets (Continued)
Assets
to
be
disposed
of
are
reported
at
the
lower
of
the
carrying
amount
or
fair
value,
less
the
estimated
costs
to
sell.
In
addition,
depreciation
of
the
asset
ceases.
During
the
period
ended
June 30, 2013, no amounts were written off from the Company’s long-lived assets.
l.
Concentration of Credit Risk and Significant Customers
Financial
instruments, which
potentially
subject
the
Company
to
concentration
of
credit
risk,
consist primarily of receivables and notes receivable. In the normal course of business, the
Company
provides
credit
terms
to
its
customers.
Accordingly,
the
Company
performs
ongoing
credit
evaluations
of
its
customers
and
maintains
allowances
for
possible
losses
which,
when
realized, have been within the range of management's expectations.
The
Company maintains its cash in
bank deposit
accounts,
which,
at
times,
may exceed
federally
insured
limits.
The
Company
has
not
experienced
any
losses
in
such
accounts
and
believes
it
is
not exposed to any significant credit risk on cash and cash equivalents.
NOTE 4 – 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
certain
reported
amounts.
Accordingly,
actual
results
could
differ
from
those estimates.
NOTE 5 – SHORT-TERM NOTES PAYABLE AND LINES OF CREDIT
The
Company
has
from
time
to
time
short-term
borrowings
from
various
unrelated
and
related
entities.
These
advances
are
non-interest
bearing,
unsecured
and
due
upon
demand.
Because
of
the short-term nature of the notes the Company has not imputed an interest rate.
NOTE 6 – REVERSE ACQUISITION
On April 14,
2010, the Company,
Interspec and those
shareholders of Interspec
holding a
majority
of
its
outstanding
shares
closed
a
transaction
pursuant
to
that
certain
Share
Exchange
Agreement, whereby the Company acquired up to 100% of the outstanding shares of
Interspec’s
common
stock
from
the
shareholders
of
Interspec
in
exchange
for
an
aggregate
of
14,000,000
shares
of
its common
stock.
As
a
result
of
closing
the
transaction
the
former
shareholders of Interspec held at closing approximately 70% of the Company’s issued and
outstanding common stock.
NOTE 7 – LITIGATION
The
Company
may
become
or
is
subject
to
investigations,
claims
or
lawsuits
ensuing
out
of
the
conduct of its business. The Company is currently not aware of any such items, which it believes
could have a material effect on its financial position.
10
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
June 30, 2013
NOTE 8 – RELATED PARTY TRANSACTIONS
The Company had no payable to related parties as of June 30, 2013.
NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The
Company’s
financial
instruments
consist
of
cash,
investments,
receivables, payables, and
notes
payable.
The
carrying
amount
of
cash,
investments,
receivables,
and
payables
approximates
fair
value
because
of
the
short-term
nature
of
these
items.
The
carrying
amount
of
long-term
notes
payable
approximates
fair
value
as
the
individual
borrowings
bear
interest
at
market interest rates.
NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS
In February
2013, the FASB issued authoritative guidance related
to reclassifications out of
accumulated
OCI.
Under
the
amendments
in
this
update,
an
entity
is
required
to
report,
in
one
place,
information
about
reclassifications
out
of
accumulated
OCI
and
to
report
changes
in
its
accumulated OCI
balances. For significant items reclassified
out of accumulated
OCI
to net
income
in
their
entirety in
the
same
reporting
period,
reporting
is
required
about
the
effect
of
the
reclassifications
on
the
respective
line
items
in
the
statement
where
net
income
is
presented.
For
items
that
are
not
reclassified
to
net
income
in
their
entirety in
the
same
reporting
period,
a
cross
reference
to
other
disclosures
currently required
under
U.S.
GAAP
is
required
in
the
notes
to
the
consolidated
financial
statements.
We
plan
to
adopt
this
guidance
in
fiscal
year
2013
and
do
not
believe that the adoption of this guidance will
have a material impact on its Consolidated
Financial Statements.
NOTE 11 – STOCKHOLDERS' EQUITY
a.
Authorized
The
Company
is
authorized
to
issue
500,000,000
shares
of
$0.001
par
value
common
stock
and
10,000,000
shares
of
preferred
stock,
par
value
$0.001
per
share.
All
common
stock
shares
have
equal voting rights, are non-assessable and have one vote per share. Voting rights are not
cumulative
and,
therefore,
the
holders
of
more
than
50%
of
the
common
stock
could,
if
they
choose to do so, elect all of the directors of the Company.
b.
Outstanding
§
On
June
11,
2010,
the
Company
effected
a
6-to-1
forward
split
of
its
20,000,000
issued
and
outstanding
common
shares,
resulting
in
120,000,000
common
shares
on
a
post
split
basis.
Shares and per
share amounts have
been retroactively restated to reflect the 6-for-1
forward stock split.
§
On
June
17,
2011,
the
Company issued
125,000
shares
of
common
stock
to
an
unrelated
party for consulting services at $0.001 per share.
§
On
August
11,
2011,
the Company issued
374,065
shares
of common stock to an
unrelated party against 8% Convertible Note.
§
On
August
17,
2011,
the Company issued
397,727
shares
of common stock to an
unrelated party against 8% Convertible Note.
11
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
June 30, 2013
NOTE 11 – STOCKHOLDERS' EQUITY (Continued)
b.
Outstanding (Continued)
§
On
August
22,
2011,
the Company issued
526,316
shares
of common stock to an
unrelated party against 8% Convertible Note.
§
On
August
31,
2011,
the Company issued
821,918
shares
of common stock to an
unrelated party against 8% Convertible Note.
§
On
September
06,
2011,
the
Company
issued
165,000
shares
of
common
stock
against
Cash Subscription.
§
On
September
26,
2011,
the
Company issued
1,331,334
shares
of
common
stock
against
Cash Subscription.
§
On
September
29,
2011,
the
Company
issued
665,000
shares
of
common
stock
against
Cash Subscription.
§
On
October
11,
2011,
the
Company
issued
1,351,351
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
October
13,
2011,
the
Company
issued
3,666,000
shares
of
common
stock
against
Debt Settlement.
§
On October 19, 2011, the Company issued 831,000 shares of common stock against Cash
Subscription.
§
On
November
02,
2011,
the
Company
issued
1,527,778
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
November
10,
2011,
the
Company
issued
331,667
shares
of
common
stock
against
Cash Subscription.
§
On
November
21,
2011,
the
Company
issued
165,699,842
shares
of
common
stock
to
a
related party against 6% Convertible Promissory Note.
§
On
December
08,
2011,
the
Company
issued
2,448,980
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
As of December 31, 2011, the Company had 300,262,978 shares of common stock issued
and outstanding
§
On February
2, 2012, the
Company
issued
5,882,353 shares of
common stock
to
an
unrelated party against 8% Convertible Note.
§
On March 15, 2012, the Company issued 5,050,505 shares of common stock to an
unrelated party against 8% Convertible Note.
§
On March 20, 2012, the Company issued 4,040,404 shares of common stock to an
unrelated party against 8% Convertible Note.
§
On March 26, 2012, the Company issued 6,071,429 shares of common stock to an
unrelated party against 8% Convertible Note.
§
On
April
11,
2012,
the Company issued
3,017,334
shares
of
common
stock
to
an
unrelated party for services.
§
On
April
17,
2012,
the Company issued
7,142,857
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
April
30,
2012,
the Company issued
6,428,571
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On May 2,
2012, the Company issued
3,250,000
shares
of
common
stock to
an unrelated
party against 8% Convertible Note.
§
On May 3,
2012, the Company issued
8,333,333
shares
of
common
stock to
an unrelated
party against 8% Convertible Note.
12
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
June 30, 2013
NOTE 11 – STOCKHOLDERS' EQUITY (Continued)
b.
Outstanding (Continued)
§
On May 16, 2012, the Company issued 11,111,111 shares of common stock to an
unrelated party against 8% Convertible Note.
§
On May 22, 2012, the Company issued 11,764,706 shares of common stock to an
unrelated party against 8% Convertible Note.
§
On May 25, 2012, the Company issued 16,129,032 shares of common stock to an
unrelated party against 8% Convertible Note.
§
On
June
13,
2012,
the
Company issued
5,714,286
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
November
26,
2012,
the
Company
issued
19,166,666
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
December
31,
2012,
the
Company
issued
19,318,182
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
January
11,
2013,
the
Company
issued
19,545,455
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
January
15,
2013,
the
Company
issued
19,545,455
shares
of
common
stock
to
an
unrelated party against 8% Convertible Note.
§
On
February
4,
2013,
the
Company
issued
9,000,000
shares
of
Preferred
stock
to
an
unrelated party against a Debt Settlement Agreement.
§
As of
March
31, 2013, the Company
had
471,774,657 shares of common stock
and
9,000,000 preferred Stock issued and outstanding
NOTE 12 – CONVERSION OF NOTES TO EQUITY
On
November
21,
2011,
the
Company's
board
of
directors
authorized
the
issuance
of
165,699,842
shares
of
common
stock to
WWA
Group,
Inc.
(“WWA
Group”),
valued
at
$2,477,544
or
$0.014952
per
share
on
conversion
of
a
convertible
promissory
note
(“Note”)
issued to WWA Group on May 17, 2011.
NOTE 13 – CHANGE IN FISCAL YEAR END
On February 6, 2012, the Company changed its fiscal year end from June 30 to December 31.
The change became effective at the end of the quarter ended December 31, 2011.
NOTE 14 – SUBSEQUENT EVENTS
In
accordance
with
Accounting
Standards
Codification
(ASC)
topic
855-10
“Subsequent
Events”
,
the
Company
has
evaluated
subsequent
events
through
the
date
which
the
financial
statements
were
available
to
be
issued.
The Company is
not
aware
of
any
subsequent events which would require recognition or disclosure in the financial
statements.
13
ITEM 2.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This
Management’s Discussion and Analysis of Financial Condition and Results of Operations
and other
parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can be identified by words such as “anticipates,” “expects,” “believes,”
“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled
Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition
below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this report. All information presented herein is based on
our quarterly period ended June 30, 2013. Our fiscal year end is December 31.
The Company's current operations consist of marketing efforts for prefabricated housing. The Company’s
prefabricated housing business is focused around the marketing and sale of “Wing Houses” in North
America, the Middle East and parts of South-East Asia as a distributor pursuant to an agreement with the
Renhe Group. The Wing House is a solution for any application requiring low-cost, rapidly-mobile
structures.
The standard Wing House units are mobile modular prefabricated structures that fold out from standard
40-foot or 20-foot shipping containers to ready-to-use structures, with all baths, water, plumbing, air
conditioning, lighting, cable, network and electrical fittings in place. This folding capacity allows a
standard 40-foot unit delivered with a 320 square foot footprint to open into an 880 square foot structure
in 4 to 5 hours, in a process requiring only basic hand tools and workers capable of following simple
instructions. Any truck and hoisting equipment capable of handling standard shipping containers can
transport and place a Wing House. Since container sizes are standard around the world, this equipment is
widely available. The combination of standard ISO container dimensions and fittings and the ability to
quickly unfold into a structure much larger than the original container makes the Wing House extremely
economical to ship. Two or more Wing Houses can be joined end to end or side to side to form larger
structures. Multiple standard floor plan configurations are available and custom plans can be ordered.
While other container-based prefabricated structures are available, they offer final available space equal
to that of the original container. We are aware of no other container-based prefabricated modular
structure that shares the ability of the Wing House to open into a structure much larger than the delivered
unit.
Wing Houses are rated for extreme temperatures, safe in hurricanes and earthquakes, meet the highest
safety and building code standards, and are very economical. The units use insulation sourced from
Bradford Insulation, Australia’s leading insulation brand. The units carry a 5-star energy use rating and
are ideal for use in extreme climates
Wing Houses come in many building configurations and room configurations, and they retail at
approximately $45,000-$85,000 ex-port in China. The Wing House is built in China by Renhe
Manufacturing and has been re-branded by the Company. Renhe has an exclusive distribution agreement
with MKL Asia, a company owned by the original patent holder who is also the principal of Renhe.
MKL Asia has granted a sub-distribution license to the Company and its affiliates to market and sell
Wing House in North America, the GCC, and most of Southeast Asia.
14
Wing Houses are suitable for a wide range of applications, including:
§
living space
§
office space
§
on site showrooms
§
restaurants
§
worker accommodation
§
forward operations bases
Standard configurations include:
§
3 Bedrooms + 1 Living room + 1 Kitchen + 1 bath + 1 Laundry
§
4 Bedrooms + 2 Kitchens + 2 baths
§
4 Bedrooms + 4 baths
§
6 Bedrooms + 6 baths
§
8 Bedrooms + 4 baths
§
1 Classroom + 1 bath + 1 Office
§
1 large room
The Wing House is available in configurations specifically optimized for classroom use, wired with high-
speed Internet and with computer stations included.
The range of products also includes the newly developed “pop out” 20 and 40 foot rapid deployment units
that slide out in minutes and are also pre-fit with all baths and fixtures.
For the six month period ended March 31, 2013:
(i)
On February 18, 2013, the Company paid the final amounts outstanding on its convertible
notes.
(ii)
On February 27, 2013, DTC lifted a depository chill on the Company’s common stock.
(iii)
The Company authorized the issuance of 9,000,000 shares of Super Voting Preferred Stock
for the settlement of nearly $256,000 in debt.
Net Losses
Net loss for the three month period ended June 30, 2013, was $29,952 as compared to $49,273 for the
three month period ended June 30, 2013. Net loss for the six month period ended June 30, 2013, was
$30,654 as compared to $104,022 for the six month period ended June 30, 2013. The decrease in net loss
over the comparable periods is due to decreases in operating expenses in the current period. The
Company is confident that it will transition to net income in the next twelve months based on the
anticipated development of its Wing House business.
Net Revenues
Net revenues for the three month periods ended June 30, 2013 and 2012 were $0. Net revenues for the six
month period ended June 30, 2013, were $0 as compared to $56,300 for the six month period ended June
30, 2012. The decrease in net revenues over the comparable periods can be attributed to the management
contract revenue in the previous period related to our Lido Phase II design/build project in Indonesia for
the U.S. Navy. We expect net revenues to increase over the next twelve months as a result of our
development of our Wing House business.
15
Gross Loss
Gross loss for the three month periods ended June 30, 2013 and 2013 were $0. Gross loss for the six
month period ended June 30, 2013 was $0 as compared to $4,886 for the six month period ended June 30,
2013. The decrease in gross loss in the current period is due the costs in the previous period associated
with the Lido Phase II project which costs exceeded corresponding revenues. We expect to transition to
gross income over the next twelve months in step with our expected realization of Wing House business.
Operating Expenses
Operating expenses for the three month period ended June 30, 2013 decreased to $10,651 from $36,750
for the three month period ended June 30, 2013. Operating expenses for the six month period ended June
30, 2013 decreased to $26,331 from $88,127 for the six month period ended June 30, 2013. Operating
expenses are from general, selling and administrative expenses, salaries and wages, and depreciation and
amortization expense. Over the three month periods general, selling and administrative expenses
decreased to $4,651 from $24,150 and over the six month periods they decreased to $14,331 from
$58,141. Over the periods salaries and wages decreased to $6,000 from $12,600 and $12,000 from
$25,100, respectively. We expect operating expenses to increase in the near term as we develop
operations.
Other Income/Expenses
Other income for the three month period ended June 30, 2013 were $19,301 compared to other expenses
of $12,523 for the three month period ended June 30, 2013. Other income for the six month period ended
June 30, 2013 were $4,322 compared to other expenses of $15,895 for the six month period ended June
30, 2013.
Liquidity and Capital Resources
Our financial statements have been prepared assuming that we will continue as a going concern and,
accordingly, do not include adjustments relating to the recoverability and realization of assets and
classification of liabilities that might be necessary should we be unable to continue operations.
As of June 30, 2013, we had a working capital deficit of $75,366. Our current and total assets were
$13,723 consisting of cash of $4,111 and other current assets of $9,612. Our current and total liabilities
were $89,089 consisting of notes payable of $20,720 and accrued expenses of $68,369. Stockholders
deficit was $75,366 as of June 30, 2013.
Cash flows used in operating activities for the six month period ended June 30, 2013 were $268,018
compared to $105,449 for the six month period ended June 30, 2012. Cash flow used in operating
activities in the current period is primarily due to changes in operating assets and liabilities of a decrease
in notes payable. We expect to transition to cash flow provided by operations over the next twelve months
once we transition from net losses to net income.
Cash flows used in investing activities for the six month period ended June 30, 2013 were $0 compared to
$19,301 for the six month period ended June 30, 2012. We expect to use cash flow in investing activities
over the next twelve months as we develop our Wing House business.
16
Cash flows provided by financing activities for the six month period ended June 30, 2013 were $264,528
as compared to $137,260 for the six month period ended June 30, 2012. Cash flows provided by financing
activities in the current period are attributable to common stock issued against debt and cash. We expect
to realize cash flows provided by financing activities over the next twelve months.
Our current assets are insufficient to meet the Company’s business objectives over the next twelve
months. We need a minimum of $100,000 in debt or equity financing to maintain operations and to fulfill
our business plan. Although, we have no commitments or arrangements for this level of financing, our
shareholders remain the most likely source of loans or equity placements to ensure our continued
operation though such support can in no way be assured. Our inability to obtain additional financing will
have a material adverse affect on our business operations.
We have no lines of credit or other bank financing arrangements in place.
We have no commitments for future capital expenditures that were material at the end of the period.
We have no defined benefit plan or contractual commitment with any of our officers or directors.
We have no current plans for the purchase or sale of any plant or equipment.
We have no current plans to make any changes in the number of employees.
We do not expect to pay cash dividends in the foreseeable future.
Future Company Financings
We will continue to rely on debt or equity sales to continue to fund our business operations even though
the issuance of additional shares will result in dilution to our existing stockholders.
Company Reporting Obligations
We do not anticipate any contingency upon which it would voluntarily cease filing reports with the
Securities and Exchange Commission as it is in the interest of the Company to report its affairs quarterly,
annually and currently to provide accessible public information to interested parties.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are material to investors.
Interest Rates
Interest rates are generally controlled. The majority of our debt is owed to a related party at a fixed
interest rate so fluctuations in interest rates do not impact our result of operations at this time. However,
we may need to rely on bank financing or other debt instruments in the future in which case fluctuations
in interest rates could have a negative impact on our results of operations.
17
Forward Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this annual report, with the exception of historical
facts, are forward looking statements. We are ineligible to rely on the safe-harbor provision of the Private
Litigation Reform Act of 1995 for forward looking statements made in this annual report. Forward-
looking statements reflect our current expectations and beliefs regarding our future results of operations,
performance, and achievements. These statements are subject to risks and uncertainties and are based
upon assumptions and beliefs that may or may not materialize. These statements include, but are not
limited to, statements concerning:
§
our financial performance;
§
the sufficiency of existing capital resources;
§
our ability to fund cash requirements for future operations;
§
uncertainties related to the growth of our business and the acceptance of our services;
§
our ability to achieve and maintain an adequate customer base to generate sufficient revenues to
maintain and expand operations;
§
the volatility of the stock market; and
§
general economic conditions.
We wish to caution readers that our operating results are subject to various risks and uncertainties that
could cause our actual results to differ materially from those discussed or anticipated including the factors
set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise
readers not to place any undue reliance on the forward looking statements contained in this report, which
reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update
or revise these forward-looking statements to reflect new events or circumstances or any changes in our
beliefs or expectations, other than is required by law.
Going Concern
Our auditors included an explanatory statement in their report on the Company’s consolidated financial
statements for the years ended December 31, 2012 and 2011, expressing an opinion as to our ability to
continue as a going concern as a result of a working capital deficit, negative cash flows, and accumulated
net losses. Our ability to continue as a going concern is subject to the ability of the Company to transition
to net income in 2013 and obtaining additional funding from outside sources. Management’s plan to
address the Company’s ability to continue as a going concern includes (i) increasing our gross profit; (ii)
financing from private placement sources; and (iii) converting outstanding debt to equity. Although the
Company believes that it will be able to remain a going concern, through the methods discussed above,
there can be no assurances that such methods will prove successful.
Recent Accounting Pronouncements
Please see Note 10 to our consolidated financial statements for recent accounting pronouncements.
18
Stock-Based Compensation
We have adopted Accounting Standards Codification Topic (“ASC”) 718, Share-Based Payment, which
addresses the accounting for stock-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair
value of the enterprise’s equity instruments or that may be settled by the issuance of such equity
instruments.
We account for equity instruments issued in exchange for the receipt of goods or services from other than
employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments issued, whichever is more
reliably measurable. The value of equity instruments issued for consideration other than employee
services is determined on the earliest of a performance commitment or completion of performance by the
provider of goods or services.
ITEM 3.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not required.
ITEM 4.
CONTROLS
AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the
Company’s management, with the participation of the chief executive officer and the chief financial
officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure
controls and procedures are designed to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the Commission’s rules and forms and that such information is accumulated and
communicated to management, including the chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by
this report, that the Company’s disclosure controls and procedures were not effective in recording,
processing, summarizing, and reporting information required to be disclosed, within the time periods
specified in the Commission’s rules and forms, and that such information was not accumulated and
communicated to management, including the chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) during the period ended June 30, 2013, that materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
19
PART II – OTHER INFORMATION
ITEM 1.
LEGAL
PROCEEDINGS
None.
ITEM 1A.
RISK
FACTORS
Our operations and securities are subject to a number of risks. Below we have identified and discussed the
material risks that we are likely to face. Should any of the following risks occur, they will adversely affect
our operations, business, financial condition and/or operating results as well as the future trading price
and/or the value of our securities.
Risk Factors Relating To Our Business
The Company’s ability to continue as a going concern is in question
Our auditors included an explanatory statement in their report on our consolidated financial statements for
the years ended December 31, 2012 and 2011, stating that there are certain factors which raise substantial
doubt about the Company’s ability to continue as a going concern. These factors include a working
capital deficit, negative cash flows, and accumulated losses.
We depend on the recruitment and retention of qualified personnel, and our failure to attract and retain
such personnel could seriously harm our business.
Due to the specialized nature of our businesses, our future performance is highly dependent upon the
continued services of our key personnel and executive officers, the development of additional
management personnel, and the recruitment and retention of new qualified engineering, manufacturing,
marketing, sales, and management personnel for our operations. Competition for personnel is intense, and
we may not be successful in attracting or retaining qualified personnel. In addition, key personnel may be
required to receive security clearances and substantial training in order to work on government sponsored
programs or perform related tasks. The loss of key employees, our inability to attract new qualified
employees or adequately train employees, or the delay in hiring key personnel could impair our ability to
prepare bids for new projects, fill orders, or develop new products.
International and political events may adversely affect our operations.
To date our revenue is derived entirely from non-United States operations, which exposes us to risks
inherent in doing business in each of the countries in which we transact business. The occurrence of any
of the risks described below could have a material adverse effect on our results of operations and financial
condition. Operations in countries other than the United States are subject to various risks peculiar to each
country. With respect to any particular country, these risks may include:
§
expropriation and nationalization of our assets in that country;
§
political and economic instability;
§
civil unrest, acts of terrorism, force majeure, war, or other armed conflict;
§
natural disasters, including those related to earthquakes and flooding;
§
inflation;
§
currency fluctuations, devaluations, and conversion restrictions;
§
confiscatory taxation or other adverse tax policies;
20
§
governmental activities that limit or disrupt markets, restrict payments, or limit the movement of
funds;
§
governmental activities that may result in the deprivation of contract rights; and
§
governmental activities that may result in the inability to obtain or retain licenses required for
operation.
Risks Relating to Our Common Stock
Our stock price is volatile.
The market price of our common stock is highly volatile and could fluctuate widely in price in response to
various factors, many of which are beyond our control, including the following:
§
services offered by us or our competitors;
§
additions or departures of key personnel;
§
our ability to execute its business plan;
§
operating results that fall below expectations;
§
loss of any strategic relationship;
§
industry developments;
§
economic and other external factors; and
§
period-to-period fluctuations in our financial results.
In addition, the securities markets have from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular companies. These market
fluctuations may also materially and adversely affect the market price of our common stock.
We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may
continue to negatively impact our financial performance.
We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002,
as well as related rules implemented by the Commission, which control the corporate governance
practices of public companies. Compliance with these laws, rules and regulations, including compliance
with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in the following risk factor, has
increased our expenses, including legal and accounting costs, and made some activities more time-
consuming and costly.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of
the Commission’s penny stock rules in trading our securities and require that a broker/dealer have
reasonable grounds for believing that the investment is suitable for that customer, prior to recommending
the investment. Prior to recommending speculative, low priced securities to their non-institutional
customers, broker/dealers must make reasonable efforts to obtain information about the customer’s
financial status, tax status, investment objectives and other information. Under interpretations of these
rules, the FINRA believes that there is a high probability that speculative, low priced securities will not be
suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers to
recommend that their customers buy our common stock, which may have the effect of reducing the level
of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional
fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in
our common stock, reducing a stockholder’s ability to resell shares of our common stock.
21
Our internal controls over financial reporting are not considered effective, which conclusion could result
in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock
price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our
management on our internal controls over financial reporting. Such report must contain, among other
matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end
of the year, including a statement as to whether or not our internal controls over financial reporting are
effective. This assessment must include disclosure of any material weaknesses in our internal controls
over financial reporting identified by management. For the period ending June 30, 2013, we were unable
to assert that our internal controls were effective. Accordingly, our shareholders could lose confidence in
the accuracy and completeness of our financial reports, which in turn could cause our stock price to
decline.
Our past capital funding needs have resulted in dilution to existing shareholders.
We have realized funding from Asher Enterprises, Inc. ("Asher"), in the form of convertible notes, which
has been converted into shares of our common stock. Additionally, we will need to realize capital funding
over the next year to further our business plan. We intend to raise this capital through equity offerings,
debt placements or joint ventures. Should we secure a commitment to provide us with capital, such
commitment may obligate us to issue shares of our common stock, warrants or create other rights to
acquire our common stock. Any new issuances of our common stock result in a dilution of our existing
shareholders interests.
Our common stock is currently deemed to be “penny stock”, which makes it more difficult for investors
to sell their shares.
Our common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of the
Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the
NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or
that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for
three or more years). These rules require, among other things, that brokers who trade penny stock to
persons other than “established customers” complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in the security, including a
risk disclosure document and quote information under certain circumstances. Many brokers have decided
not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number
of broker-dealers willing to act as market makers in such securities is limited. If the Company remains
subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if
any, for our securities. If our securities are subject to the penny stock rules, investors will find it more
difficult to dispose of the Company’s securities.
22
The elimination of monetary liability against our directors, officers and employees under Nevada law and
the existence of indemnification rights for our directors, officers and employees may result in substantial
expenditures by the Company and may discourage lawsuits against our directors, officers and employees.
Our certificate of incorporation contains a specific provision that eliminates the liability of directors for
monetary damages to the Company and the Company’s stockholders; further, the Company is prepared to
give such indemnification to its directors and officers to the extent provided by Nevada law. The
Company may also have contractual indemnification obligations under its employment agreements with
its executive officers. The foregoing indemnification obligations could result in the Company incurring
substantial expenditures to cover the cost of settlement or damage awards against directors and officers,
which the Company may be unable to recoup. These provisions and resultant costs may also discourage
the Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties
and may similarly discourage the filing of derivative litigation by the Company’s stockholders against the
Company’s directors and officers even though such actions, if successful, might otherwise benefit the
Company and its stockholders.
ITEM 2.
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS
ON SENIOR SECURITIES
None.
ITEM 4.
MINE
SAFTETY DISCLOSURES
Not applicable.
ITEM 5.
OTHER
INFORMATION
None.
ITEM 6.
EXHIBITS
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page
25 of this Form 10-Q, and are incorporated herein by this reference.
23
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.
Infrastructure Developments Corp.
Date
/s/ Eric Montandon
August 19, 2013
By: Eric Montandon
Its:
Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer and Director
24
INDEX
TO EXHIBITS
Number Description
3.1.1*
Articles of Incorporation filed with the Nevada Secretary of State on August 10, 2006. Incorporated
by reference as
Exhibits to the Form SB-1 filed on May 11, 2007.
3.1.2*
Certificate of Amendment to the Articles of Incorporation filed with the Nevada Secretary of State on April 23,
2007. Incorporated by reference to the Company’s Registration Statement on Form SB-1 filed with the Commission
on May 11, 2007.
3.1.3*
The
Certificate of Amendment to the Company’s Articles of Incorporation was filed with the Secretary of State of
the Nevada on March 1, 2010. Incorporated by reference to the Company’s Definitive Information Statement on
Schedule 14C as filed with the Commission on February 2, 2010.
3.1.4*
The
Certificate of Amendment to the Company’s Articles of Incorporation was filed with the Secretary of State of
the Nevada on April 9, 2010. Incorporated by reference to the Company’s current Report on Form 8-K as filed with
the Commission on April 14, 2010.
3.2*
Bylaws. Incorporated by reference to the Company’s Registration
Statement on Form SB-1 filed with the
Commission on May 11, 2007.
10.1*
Securities Purchase Agreement, dated July 1, 2008, between Interspec, Interspec LLC and Tom Morgan.
Incorporated by reference to our current Report on Form 8-K as filed with the Commission on April 26, 2010.
10.2*
Employment Agreement, dated August 1, 2008, between Interspec and Tom
Morgan. Incorporated by reference to
the Company’s current Report on Form
8-K as filed with the Commission on April 26, 2010.
10.3*
Share Exchange Agreement dated April 1, 2010, between the Company and Interspec. Incorporated by reference to
the Company’s current Report on Form
8-K as filed with the Commission on April 8, 2010.
10.4*
Promissory Note with WWA Group, Inc., dated May 17, 2011. Incorporated by reference to the Company’s Form
10-Q filed with the Commission
on May 23, 2011.
10.5*
Security Purchase Agreement and Convertible Promissory Note with Asher Enterprises, Inc. Incorporated by
reference to the Company’s Form 10-K filed with the Commission on October 7, 2011.
10.6*
Memorandum of Understanding and Addendum
with Cleanfield Energy, Inc. Incorporated by reference to the
Company’s Form 10-K filed with the Commission on October 7, 2011.
10.7*
Accord and Satisfaction with Thomas R. Morgan. Incorporated by reference to the Company’s Form 10-Q filed with
the Commission on November 18, 2011.
10.8*
Share Exchange Agreement with InterMedia Development Corporation (dated January 11, 2012) entered into on
February 1, 2012. Incorporated by reference to the Company’s Form 8-K filed with the Commission on February 13,
2012.
10.9*
Debt Settlement Agreement with Morningstar Corporate Communications (dated April 11, 2012). Incorporated by
reference to the Company's Form 10-Q filed with the Commission on May 15, 2012.
10.10*
Debt Settlement Agreement with Cleanfield Communications (dated June
4, 2012). Incorporated by reference to the
Company's Form 10-Q filed with the Commission on August 20, 2012.
14*
Code of Ethics adopted October 6, 2011. Incorporated by reference to the Company’s Form 10-K filed with the
Commission on October 7, 2011.
21*
Subsidiaries. Incorporated by reference to the Company’s current Report on Form 8-K as filed with the Commission
on April 26, 2010.
31
Certification of the
Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities
and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(attached).
32
Certification of the
Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).
101. INS XBRL Instance Document
†
101. PRE XBRL Taxonomy Extension Presentation Linkbase
†
101. LAB
XBRL Taxonomy Extension Label Linkbase
†
101. DEF XBRL Taxonomy Extension Label Linkbase
†
101. CAL
XBRL Taxonomy Extension Label Linkbase
†
101. SCH
XBRL Taxonomy Extension Schema
†
*
Incorporated by
reference from
previous filings of the Company.
†
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a
registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and
not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability
under
these sections.
25