UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
quarterly period ended March 31, 2012.
o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
transition period from
to
.
Commission file number: 000-52936
INFRASTRUCTURE DEVELOPMENTS CORP.
(Exact name of registrant as specified in its charter)
Nevada
27-1034540
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
299 S. Main Street, 13th Floor, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
(801) 488-2006
(Registrant’s telephone number, including area code)
n/a
(Former name, former address and former fiscal year, if changes 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 during the past 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 þ No o.
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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act:
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act): Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date. The number of shares outstanding of the issuer’s common stock, $0.001 par value (the
only class of voting stock), at May 15, 2012, was 349,479,764.
1
TABLE OF CONTENTS
PART 1- FINANCIAL INFORMATION
Item1.
Financial Statements:
Consolidated Balance Sheets as of March 31, 2012 (unaudited) and December 31,
2011
Unaudited Consolidated Statements of Operations for the Three month periods
ended March 31, 2012 and March 31, 2011
Unaudited Consolidated Statements of Cash Flows for the Three month periods
ended March 31, 2012 and March 31, 2011
Notes to Financial Statements
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
PART II-OTHER INFORMATION
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
(Removed and Reserved)
Item 5.
Other Information
Item 6.
Exhibits
Signatures
Index to Exhibits
2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
As used herein, the terms “Company,” “we,” “our,” and “us” refer to Infrastructure Developments Corp.,
a Nevada corporation, and our subsidiaries and predecessors, unless otherwise indicated. In the opinion of
management, the accompanying unaudited financial statements included in this Form 10-Q reflect all
adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results
of operations for the periods presented. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
3
Infrastructure Developments Corp.
Condensed Consolidated Balance Sheets
As of March 31,
As of December 31,
ASSETS
2012
2011*
(Unaudited)
CURRENT ASSETS
Cash
$
18,319
$
42,690
Receivables, net
-
-
Prepaid expenses
24,073
32,406
Other current assets
21,141
14,709
Total current assets
63,533
89,805
FIXED ASSETS, Net
-
-
TOTAL ASSETS
$
63,533
$
89,805
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable
$
304,426
$
328,226
Accounts payable
45,260
27,856
Accrued expenses
47,452
40,079
Total current liabilities
397,138
396,161
Long-term debt
-
-
TOTAL LIABILITIES
397,138
396,161
STOCKHOLDERS' EQUITY
Common Stock
Authorized: 500,000,000 common shares with $0.001 par value
Issued: 321,307,669
321,308
300,263
Additional paid-in capital
8,480,320
8,473,865
Retained earnings
(9,135,233)
(9,080,484)
Total Stockholders' Deficit
(333,605)
(306,357)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
63,533
$
89,805
* The Balance Sheet as of December 31, 2011 has been derived from the audited financial statements of that date.
The accompanying notes are an integral part of these consolidated financial statements
4
Infrastructure Developments Corp.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31, 2012
March 31, 2011
Net revenues:
Project Management
$
56,300
$
189,469
Total net revenues
56,300
189,469
Cost of Goods Sold
61,186
208,552
Gross Loss
(4,886)
(19,083)
Operating expenses:
General, selling and administrative expenses
33,991
517,689
Salaries and wages
12,500
92,694
Provision for Slow Moving Inventories
-
1,387,123
Bad debt Expenses (Power Track)
-
357,321
Total operating expenses
46,491
2,354,827
Loss from operations
(51,377)
(2,373,910)
Other income (expense):
Interest income/(expenses)
(4,372)
-
Loss in sale of fixed assets
-
(1,091,071)
Other income (expense)
1,000
335,715
Total other expense
(3,372)
(755,356)
Income (loss) before income tax
(54,749)
(3,129,266)
Provision for income taxes
-
-
Net Loss
$
(54,749)
$
(3,129,266)
Other Comprehensive Income (Loss)
$
-
$
-
Total Comprehensive Loss
$
(54,749)
$
(3,129,266)
Basic income (loss) per share
$
(0.00)
$
(0.02)
Fully diluted income (loss) per share
$
(0.00)
$
(0.02)
Basic weighted average number of shares outstanding
309,238,659
182,518,012
Fully diluted weighted average number of shares outstanding
309,238,659
182,518,012
The accompanying notes are an integral part of these consolidated financial statements
5
Infrastructure Developments Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31, 2012
March 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ( loss)
$
(54,749)
$
(3,655,290)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization
-
238,117
(Gain)Loss on disposition of assets
-
1,091,071
Changes in operating Assets and Liabilities:
Decrease (increase) in:
Accounts receivable
-
483,900
Inventories
-
1,636,967
Prepaid expenses
8,333
35,504
Other current assets
(6,432)
84,705
Increase (decrease) in:
Notes payable
(23,800)
(2,144,034)
Accounts payable
17,404
(549,671)
Accrued liabilities
7,373
(30,243)
Net Cash Provided (Used) in Operating Activities
(51,870)
(2,808,974)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment
-
-
Proceeds from sale of Fixed Assets
-
412,446
Net Cash Provided (Used) by Investing Activities
-
412,446
CASH FLOWS FROM FINANCING ACTIVITIES
Common Stock issued against services
-
-
Common stock issued Against Debt and Cash
27,500
-
Increase in Long term debt
-
2,442,003
Net Cash Provided by Financing Activities
27,500
2,442,003
NET INCREASE IN CASH
(24,371)
45,477
CASH AT BEGINNING OF PERIOD
42,690
55,939
CASH AT END OF PERIOD
$
18,319
$
101,416
The accompanying notes are an integral part of these consolidated financial statements
6
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
March 31, 2012
NOTE 1 - ORGANIZATION AND HISTORY
Infrastructure Developments Corp. (the “Company”), was incorporated in Nevada as “1st Home Buy &
Sell Ltd.” on August 10, 2006, to operate as a real estate company. The Company changed its name from
“1st Home Buy & Sell Ltd.” to “Infrastructure Developments Corp.” on March 1, 2010, while evaluating
possible business combinations, acquisitions or development opportunities.
On April 14, 2010, the Company and Intelspec International Inc. (“Intelspec”), a Nevada corporation,
(now known as "Intelspec International Inc.") executed a stock exchange agreement, whereby the
Company agreed to acquire 100% of the issued and outstanding shares of Intelspec in exchange for
14,000,000 shares of the Company’s common stock. Because the owners of Intelspec became the
principal shareholders of the Company through the transaction, Intelspec is considered the acquirer for
accounting purposes and this transaction is accounted for as a reverse acquisition or recapitalization of
Intelspec. Following the closing of the share exchange agreement, the Company's principal business
became that of Intelspec. On April 26, 2010, the Company disclosed the information that would have
been required if it were filing a general form for registration of securities on Form 10, as required under
Item 2.01(f) of Form 8-K, thereby removing its status as a “shell” company.
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)
March 31, 2012
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 March 31, 2012.
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.
8
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
March 31, 2012
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
h.
Advertising
The Company expenses the cost of advertising as incurred. For the period ended March 31, 2012, 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.
l.
Impairment of Long-Lived Assets
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 March 31, 2012, $0
was written off from the Company’s long-lived assets.
9
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
March 31, 2012
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
m.
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
On March 15, 2011, June 1, 2011 and March 7, 2012 the Company had issued promissory notes in the
amounts of $60,000, $40,000 and $19,000 respectively, to Asher Enterprises, Inc., an unrelated party, at
an interest rate of 8%, with an option to convert the outstanding balance into shares of the Company’s
common stock with a discount off the market price at the time of conversion. At March 30, 2012, $71,400
has remained outstanding under the notes.
Additionally, 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. Due to 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, Intelspec and those shareholders of Intelspec 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 Intelspec’s common stock from the
shareholders of Intelspec 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 Intelspec 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)
March 31, 2012
NOTE 8 – RELATED PARTY TRANSACTIONS
The Company had no payables to related parties as of March 31, 2012
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 June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income, Presentation of
Comprehensive Income and in December 2011, the FASB issued ASU No. 2011-12, Deferral of the
Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other
comprehensive Income in ASU 2011-05 to increase the prominence of items reported in other
comprehensive income. Specifically, the new guidance allows an entity to present components of net
income or other comprehensive income in one continuous statement, referred to as the statement of
comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the
current option to report other comprehensive income and its components in the consolidated statement of
shareholders' equity. While the new guidance changes the presentation of comprehensive income, there
are no changes to the components that are recognized in net income or other comprehensive income under
current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning
after December 15, 2011. We adopted this guidance on January 1, 2012 and have presented a new
financial statement titled Condensed Consolidated Statement of Comprehensive Income for the three
month periods ending March 31, 2012 and April 2, 2011.
NOTE 11- STOCK HOLDERS' 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.
Issued
• 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.
• As of June 30, 2010, the Company had 120,000,000 shares of common stock issued and
outstanding.
• On January 17, 2011, the Company issued 125,000 shares of common stock to an unrelated party
for consulting services at $0.001 per share.
• As of June 30, 2011, the Company had 120,125,000 shares of common stock issued and
outstanding.
11
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
March 31, 2012
NOTE 11- STOCK HOLDERS' EQUITY (Continued)
b.
Issued (Continued)
• 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.
• 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 02, 2012, the Company issued 5,822,353 shares of common stock to an unlrelated
party against 22% convertible note.
• On March 15, 2012, the Company issued 5,050,505 shares of common stock to an unlrelated
party against 22% convertible note.
• On March 20, 2012, the Company issued 4,040,404 shares of common stock to an unlrelated
party against 22% convertible note.
• On March 26, 2012, the Company issued 6,071,429 shares of common stock to an unlrelated
party against 22% convertible note.
• As of March 31, 2012, the Company had 321,307,669 shares of common stock issued and
outstanding
12
INFRASTRUCTURE DEVELOPMENTS CORP.
Condensed Notes to the Financial Statements (Unaudited)
March 31, 2012
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 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 has determined that the following such event warrants disclosure or
recognition in the financial statements:
• Subsequent to the three months ended March 31, 2012, the Company issued shares of its common
stock upon receiving conversion notices by Asher Enterprises, Inc. (see Note 5) as follows:
Conversion Dates
Conversion
Conversion
Conversion
Amount
Price
Shares
April 17, 2012
$10,000
0.0014
7,142,857
April 30, 2012
$9,000
0.0014
6,428,571
May 2, 2012
$3,400*
0.0012
3,250,000
May 3, 2012
$10,000
0.0012
8,333,333
* Includes $2,400 in interest on the note.
.
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 March 31, 2012. Our fiscal year end is December 31.
Beginning in 2008 we targeted a wide variety of private and government funded jobs in the Middle East,
particularly in the U.A.E., but the substantial economic slowdown in these markets shifted our focus to
U.S. government contracts and subcontracts in Southeast Asia. However, because of the narrow profit
margins on our U.S. Navy contracts in Southeast Asia, as well as our competition in the area, we have
suspended bidding on such projects at this time. We will bid on specialty contracts as they arise and we
will continue to market prefabricated housing as opportunities arise. The Company has more recently
begun focusing on U.S. governmental operations in the United States and on the Company's alternative
engine fuels operations in Thailand and the United States.
The Company's first big step into the alternative fuels business is with operations at its facility in
Chonburi, Thailand with the diesel to CNG conversion of a huge 250Kva/200Kw Cummins diesel
generator at the end of 2011. The Company expects to expand CNG operations with additional generator
acquisitions, conversions and sales in Thailand in the coming months.
On July 1, 2011, the Company entered into a memorandum of understanding with Cleanfield Energy, Inc.
("Cleanfield"), as amended on July 7, 2011. The MOU provides the Company with the exclusive right to
collaborate with Cleanfield and the right of first refusal to acquire or form a more comprehensive joint
venture with Cleanfield. The Company has been committed to providing Cleanfield with interim funding
to cover expenses for the furtherance of the business plan. At the end of 2011 we opened a conversion
location with Cleanfield in Tempe, Arizona. When this facility becomes fully established, the Company
intends to establish a regional network of conversion facilities and fueling points. This expansion will use
a number of proven devices, including fully owned branches, franchises, and innovative joint ventures.
For the three month period ended March 31, 2012:
(i)
The Company continued contact with U.S. firms to establish strategic partnerships for
domestic U.S. military projects.
(ii)
The Company received its final payment for the U.S. Navy’s Lido Phase II Project in
Indonesia and made final payments to our subcontractors.
14
(iii)
On February 1, 2012, the Company entered into a Share Exchange Agreement (dated January
11, 2012) with InterMedia Development Corporation ("InterMedia") whereby the Company
is to acquire 100% of the outstanding shares of InterMedia’s common stock from
InterMedia's shareholders in exchange for an aggregate of 84,000,000 shares of the
Company’s common stock. As a result of closing the transaction the InterMedia shareholders
would hold approximately 20% of our issued and outstanding common stock. The parties
expect to amend the closing date of the Agreement to close the Agreement in the coming
months. As an obligation to consummate the closing of the Agreement, the Company will
initiate two private placements to raise a minimum of $300,000 within six months and an
additional minimum of $400,000 within twelve months of closing the Agreement. If the
Company fails to raise the minimum amounts, the Company will be required to issue an
additional 20,000,000 shares and may be required to issue an additional 90,000,000 shares,
respectively. InterMedia is a media production company and defense contractor based in
Fairfax, Virginia.
(iv)
On February 6, 2012, the Company changed its fiscal year end from June 30 to December 31.
The report covering the transition period was filed on Form 10-K for the six-month period
between June 30, 2011 and December 31, 2012.
Net Losses
Net loss for the three month period ended March 31, 2012 was $54,749 as compared to $3,129,266 for the
three month period ended March 31, 2011, a decrease of 98%. The decrease in net loss over the
comparable periods is due to decreases in operating expenses and the absence of losses associated with
Power Track Projects FZE’s ("Power Track") business in the current three month period. Net loss in the
previous three month period was primarily due to costs associated with Power Track’s business. The
Company is confident that it will transition to net income in the next twelve months based on the
prospective acquisition of InterMedia and the anticipated development of CNG related activities in the
U.S. and Thailand.
Net Revenues
Net revenues for the three month period ended March 31, 2012 were $56,300 as compared to $189,469
for the three month period ended March 31, 2011, a decrease of 70%. The decrease in net revenues over
the comparable periods can be attributed to a decrease in management contract revenue related to Lido
Phase II. We expect net revenues to increase over the next twelve months as a result of our development
of CNG related activities in the U.S. and Thailand.
Gross Profit/ Loss
Gross loss for the three month period ended March 31, 2012 was $4,886 as compared to $19,083 for the
three month period ended March 31, 2011, a decrease of 74%. The decrease in gross loss in the current
period is due to costs from our Lido Phase II project which exceeded revenues. We expect to transition to
gross profits over the next twelve months in step with our expected realization of CNG related revenues.
15
Operating Expenses
Operating expenses for the three month period ended March 31, 2012 decreased to $46,491 from
$2,354,827 for the three month period ended March 31, 2011, a decrease of 98%. Operating expenses are
from general, selling and administrative expenses, salaries and wages, and depreciation and amortization
expense. Over the periods general, selling and administrative expenses decreased to $33,991 from
$517,689 and salaries and wages decreased to $12,500 from $92,694. Over the periods our provision for
slow moving inventories and bad debt expense (due to the suspension of Power Track's quarry operations)
decreased to $0 from $1,387,123 and $357,321, respectively. We expect operating expenses to increase in
the near term as we develop CNG related operations.
Other Expenses
Other expenses for the three month period ended March 31, 2012 were $3,372 compared to $755,356 for
the three month period ended March 31, 2011. The decrease was primarily due to a loss in the previous
period of $1,091,071 on the sale of Power Track’s fixed assets (crushing and mobile earthmoving
equipment, a mobile labor camp, trucks, generators, and compressors for use in Power Track’s mining
operations).
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 March 31, 2012, we had a working capital deficit of $333,605. Our current and total assets were
$63,533 consisting of cash of $18,319, prepaid expenses of $24,073 and other current assets of $21,141.
Our current and total liabilities were $397,138 consisting of notes payable of $304,426, accounts payable
of $45,260 and accrued expenses of $47,452. Stockholders deficit was $333,605 as of March 31, 2012.
Cash flows used in operating activities for the three month period ending March 31, 2012 were $51,870
compared to $2,808,974 for the three month period ending March 31, 2011. Cash flow used in operating
activities in the current period is primarily due to net losses, and changes in operating assets and liabilities
of both a decrease in notes payable and an increase in other current assets. 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 provided by investing activities for the three month period ending March 31, 2012 were $0
compared to $412,446 for the three month period ending March 31, 2012. We expect to use cash flow in
investing activities over the next twelve months as we develop CNG operations in the U.S. and Thailand.
Cash flows provided by financing activities for the three month period ending March 31, 2012 were
$27,500 as compared to $2,442,003 for the three month period ending March 31, 2011. Cash flows
provided by financing activities in the current period are attributable to common stock issued against debt
and cash. In the previous period cash flow provided by financing activities was due to long term debt
owed to WWA Group. We expect to realize cash flows provided by financing activities over the next
twelve months in connection with our agreement to acquire InterMedia.
16
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 in addition to $700,000 required to complete the acquisition of InterMedia. 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 transition periods ended December 31, 2011 and 2010 and the years ended June 30,
2011 and 2010, 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 2012 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 the 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 the 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 March 31, 2012, 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 six month transition periods ended December 31, 2011 and 2010 and the years ended June 30, 2011
and 2010, 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.
The scope of our business is has been limited to small and mid-sized private and government contracts.
The Company is a global engineering and project management service provider; however a substantial
economic slowdown in these markets led us to focus primarily on U.S. government contracts and
subcontracts. If we cannot continue to attain new government contracts and/or new subcontracts from
some larger engineering contractors, our business could be adversely affected. Furthermore, if the demand
engineering and project management continues to slowdown within our market, the Company could be
adversely affected.
From time to time we may be required to suspend services to commercial and private customers to meet
the priority demands of governmental military contractors, which may adversely impact our marketing to
commercial and private customers.
The priority needs of governmental military contractors may require that we suspend services to some or
all of our contracts from the commercial and private sector. The size and level of priority of services
from governmental agencies are irregular and unpredictable, and from time to time in the past, we have
had to delay fulfilling contracts from our commercial and private customers until priority governmental
contracts have been fulfilled. This may damage our reputation among the commercial and private sector
and potential future contracts and, in turn, adversely impact our marketing to such customers and
potential customers in the commercial sector.
20
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 engineering 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.
Our activities are affected by the level of U.S. defense spending, and a reduction in current defense
budget expenditures or changing governmental priorities could significantly reduce sales under
governmental contracts.
Our revenues from the U.S. government largely result from contracts awarded by military purchasers
under various defense programs. The funding of defense programs is subject to the overall U.S.
governmental budget and appropriation decisions and processes, and our programs must compete for
funding with nondefense programs and other defense programs in which we are not involved. U.S.
governmental budget decisions, including defense spending, are based on changing governmental
priorities and objectives, which are driven by numerous factors, including national and international
geopolitical events and economic conditions, and are beyond our control. In recent years, the overall
level of U.S. defense spending has increased for numerous reasons, including increases in funding of
operations in Iraq and Afghanistan and the U.S. Department of Defense’s military transformation
initiatives. We cannot assure that U.S. defense spending will continue to grow, particularly in view of the
recent changes in the controlling political party in Congress. Significant changes to U.S. defense spending
could have long-term consequences for the market of our services. In addition, as a result of changing
governmental priorities and requirements, defense spending could shift away from the current importance
of military force and facility construction into new areas, and the timing of funding of force and facility
construction could change. Shifts or reductions in defense spending or changes in timing could result in
the reduction or elimination of, or the delay in, funding of one or more of our defense programs, which
could negatively impact our results of operations and financial condition.
A large scope of our business is governed by U.S. governmental contracts, which are subject to continued
appropriations by Congress and termination.
We supply engineering and project management either directly or as a subcontractor for various U.S.
governmental civilian and military programs, all of which are generally subject to congressional
appropriations. Congress generally appropriates funds on a fiscal year basis even though a program may
extend for several years. Consequently, programs are often only partially funded initially, and additional
funds are committed only as Congress makes further appropriations. U.S. governmental contracts and
subcontracts under a program are subject to termination or adjustment if appropriations for such program
are not available or change. In addition, U.S. governmental contracts generally contain provisions
permitting partial or total termination, without prior notice, at the U.S. government’s convenience as well
as termination for default based on performance. Upon termination for convenience, we generally will be
entitled to compensation only for services rendered and commitments completed at the time of
termination. A termination arising out of our default could expose us to liability and have a negative
impact on our ability to obtain future contracts and orders.
21
Our financial performance is highly dependent on our procurement, performance, and payment under our
U.S. governmental contracts. The termination of one or more large contracts, whether due to lack of
funding, for convenience, or otherwise, could materially adversely affect our business. In such an event,
our losses would likely increase as we would continue to incur operating costs as we sought to procure
new U.S. government contracts to offset the revenues lost as a result of any termination of our contracts.
Among the factors that could materially adversely affect our federal governmental contracting business
are:
• budgetary constraints affecting federal government spending generally, or defense and
intelligence spending in particular, and annual changes in fiscal policies or available funding;
• changes in federal governmental programs, priorities, procurement policies, or requirements;
• new legislation, regulations, or governmental union pressures on the nature and amount of
services the government may obtain from private contractors;
• federal governmental shutdowns (such as during the government’s 1996 fiscal year) and other
potential delays in the governmental appropriations process; and
• delays in the payment of our invoices by governmental payment offices due to problems with, or
upgrades to, governmental information systems, or for other reasons.
These or other factors could cause federal governmental agencies, or prime contractors when we are
acting as a subcontractor, to reduce their purchases under contracts, to exercise their right to terminate
contracts, or to not exercise options to renew contracts, any of which could reduce sales, including our
sales backlog, while costs continued as are sought to develop sales have a materially adverse effect on our
business, financial condition, and results of operations.
We enter into fixed-price contracts that could subject us to losses in the event that we have cost overruns.
Many of our contracts are entered into on a fixed-price basis. This allows us to benefit from cost savings,
but we carry the financial risk of cost overruns. If our initial estimates on project completion are incorrect,
we can lose money on these contracts. In addition, some of our contracts have provisions relating to cost
controls and audit rights, and if we fail to meet the terms specified in those contracts, then we may not
realize their full benefits. Lower earnings caused by cost overruns and cost controls would reduce or
eliminate the gross margins under our contracts.
We could be suspended or debarred from contracting with the federal government.
We could be suspended or debarred from contracting with the federal government generally or any
significant agency in the intelligence community or Department of Defense for, among other things,
actions or omissions that are deemed by the government to be so serious or compelling that they affect
our contractual responsibilities. For example, we could be debarred for committing a fraud or criminal
offense in connection with obtaining, attempting to obtain, or performing a contract or for embezzlement,
fraud, forgery, falsification, or other causes identified in applicable federal acquisition regulations. In
addition, our reputation or relationship with the governmental agencies could be impaired. If we were
suspended or debarred, or if our relationship or reputation were impaired, our sales opportunities and
revenues would be reduced and our operating loss would increase.
22
International and political events may adversely affect our operations.
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;
• 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.
Due to the unsettled political conditions in many oil-producing countries and countries in which we
provide governmental logistical support, our revenue and profits are subject to the adverse consequences
of war, the effects of terrorism, civil unrest, strikes, currency controls, and governmental actions.
We work in international locations where there are high security risks, which could result in harm to our
employees and contractors or substantial costs.
Some of our services are performed in high-risk locations where the country or location is suffering from
political, social or economic issues, or war or civil unrest. In those locations where we have employees or
operations, we may incur substantial costs to maintain the safety of our personnel. Despite these
precautions, the safety of our personnel in these locations may continue to be at risk, and we have in the
past and may in the future suffer the loss of employees and contractors.
We are subject to significant foreign exchange and currency risks that could adversely affect our
operations and our ability to reinvest earnings from operations, and our ability to limit our foreign
exchange risk through hedging transactions may be limited.
A sizable portion of our consolidated revenue and consolidated operating expenses are in foreign
currencies. As a result, we are subject to significant risks, including:
• foreign exchange risks resulting from changes in foreign exchange rates and the implementation
of exchange controls; and
• limitations on our ability to reinvest earnings from operations in one country to fund the capital
needs of our operations in other countries.
23
In particular, we conduct business in countries that have non-traded or “soft” currencies which, because
of their restricted or limited trading markets, may be difficult to exchange for “hard” currencies. The
national governments in some of these countries are often able to establish the exchange rates for the local
currency. As a result, it may not be possible for us to engage in hedging transactions to mitigate the risks
associated with fluctuations of the particular currency. We are often required to pay all or a portion of our
costs associated with a project in the local soft currency. As a result, we generally attempt to negotiate
contract terms with our customer, who is often affiliated with the local government, to provide that we are
paid in the local currency in amounts that match our local expenses. If we are unable to match our costs
with matching revenue in the local currency, we would be exposed to the risk of an adverse change in
currency exchange rates.
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.
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.
24
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.
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 three month period ending March 31, 2012,
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 and future capital funding needs have resulted in dilution to existing shareholders.
To the date of this quarterly report we realized funding of $194,000 from Asher Enterprises, Inc.
("Asher"), in the form of convertible notes, $150,400 of which (including $5,400 in interest) to date has
been converted into nearly 54,000,000 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. The issuances to Asher and 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.
25
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
On January 27, 2011, March 15, 2011, June 1, 2011, and March 7, 2012 the Company issued promissory
notes in the amounts of $75,000, $60,000, $40,000, $19,000 respectively, to Asher Enterprises, Inc.
("Asher"), an unrelated party, at an interest rate of 8%, each with a nine month term, and an option to
convert the outstanding balance of principal and interest into shares of our common stock at a 40%
discount off the market price at the time of conversion (the March 15 and June 1, 2011 notes have been
amended to be converted at a 55% discount with indefinite terms) pursuant to the exemptions from
registration provided by Section 4(2) and Regulation D of the Securities Act. We have issued shares of
our common stock upon receiving conversion notices by Asher as follows:
Note
Due
Conversion
Conversion Conversion Conversion Dates Remaining
Amounts
Amount
Price
Shares
Balance
$75,000
October 27, 2011
$15,000
0.0401
374,065
August 11, 2011
$14,000
0.0352
397,727
August 17, 2011
$16,000
0.0304
526,316
August 22, 2011
$12,000
0.0146
821,918
August 31, 2011
$10,000
0.0074
1,351,351
October 11, 2011
$11,000*
0.0074
1,527,778
November 2, 2011
$0
$60,000
December 15, 2011
$12,000
0.0049
2,448,980
December 8, 2011
$10,000
0.0017
5,882,353
February 2, 2012
$5,000
0.00099
5,050,505
March 15, 2012
$4,000
0.00099
4,040,404
March 20, 2012
$8,500
0.0014
6,071,429
March 26, 2012
$10,000
0.0014
7,142,857
April 17, 2012
$9,000
0.0014
6,428,571
April 30, 2012
$3,400**
0.0012
3,250,000
May 2, 2012
$0
$40,000
March 1, 2012
$10,000
0.0012
8,333,333
May 3, 2012
$30,000
$19,000
December 12, 2012
$19,000
Total
$49,000
*
Includes $3,000 in interest from the note due on October 27, 2011.
**
Includes $2,400 in interest from the note due on December 15, 2011.
26
The Company complied with the exemption requirements of Section 4(2) of the Securities Act based on
the following factors: (1) the offers were isolated private transactions by the Company which did not
involve public offerings; (2) the offeree has access to the kind of information which registration would
disclose; and (3) the offeree is financially sophisticated.
The Company complied with the requirements of Regulation D of the Securities Act by: (i) foregoing any
general solicitation or advertising to market the securities; (ii) offering only to an accredited offeree; (iii)
having not violated antifraud prohibitions with the information provided to the offeree; (iv) being
available to answer questions by the offeree; and (v) providing restricted promissory notes to the offeree.
On April 11, 2012, the Company's board of directors authorized the issuance of 3,017,334 shares of its
common stock valued at $45,260 or $0.015 per share to Raymond Dove pursuant to a debt settlement
agreement with Morningstar Corporate Communications pursuant to a consulting agreement with a
contractual period of May 20, 2010 through May 19, 2011, pursuant to the exemptions from registration
provided by Section 4(2) of the Securities Act.
The Company complied with the exemption requirements of Section 4(2) of the Securities Act based on
the following factors: (1) the offer was an isolated private transaction by the Company which did not
involve a public offering; (2) the offeree has access to the kind of information which registration would
disclose; and (3) the offeree is financially sophisticated.
ITEM 3.
DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4.
(REMOVED AND RESERVED)
Removed and reserved
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
29 of this Form 10-Q, and are incorporated herein by this reference.
27
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/ Thomas Morgan
May 15, 2012
By: Thomas Morgan
Its: Chief Executive Officer and Director
/s/ Digamber Naswa
May 15, 2012
By: Digamber Naswa
Its: Chief Financial Officer and Principal Accounting Officer
28
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.
Debt Settlement Agreement with Morningstar Corporate Communications (dated April 11, 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.
Certification of the Chief Executive 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).
Certification of the 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).
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (attached).
Certification of the 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.
29
Exhibit 10.9
DEBT SETTLEMENT AGREEMENT
This Debt Settlement Agreement (this “Agreement”) is effective April 11, 2012 between Morningstar
Corporate Communications (“Creditor”) and Infrastructure Developments Corp. (“Debtor”).
SECTION ONE
ACKNOWLEDGEMENT OF EXISTING OBLIGATION
The parties acknowledge that Debtor is indebted to Creditor in the sum of forty five thousand two
hundred and sixty dollars ($45,260) pursuant to a consulting agreement with a contractual period of May
20, 2010 through May 19, 2011 (the "Consulting Agreement").
SECTION TWO
AGREEMENT FOR DIFFERENT METHOD OF PAYMENT
Debtor and Creditor desire and agree to provide for the payment of the above-stated indebtedness in
accordance with terms and provisions different from, and in substitution of, the terms and obligations of
loan repayment as described in Section One above.
SECTION THREE
CONSIDERATION
In consideration of the mutual promises contained in this Agreement, Debtor and Creditor agree as
follows:
a.
Method of Payment: Debtor agrees to pay to Creditor and Creditor agrees to accept from
Debtor, in full satisfaction of the terms of the Consulting Agreement and the $45,260 of the
indebtedness described in Section One, three million, seventeen thousand, three hundred and
thirty four (3,017,334) shares of Debtor’s common stock, valued at $0.015 per share
.
b.
Satisfaction: On execution of this Agreement and Debtor’s board of directors resolution
authorizing the issuance of 3,017,334 shares of Debtor’s common stock to Raymond Dove
for the Creditor, any and all indebtedness of Debtor to Creditor will be forever cancelled and
discharged.
In witness whereof, the parties have executed this Agreement on the date first mentioned above.
Infrastructure Developments Corp.
/s/ Thomas Morgan
By: Thomas Morgan, chief executive officer
Morningstar Corporate Communications
/s/ Chris Dove
By: Chris Dove, president
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas Morgan, certify that:
1. I have reviewed this report on Form 10-Q of Infrastructure Developments Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and
internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)
for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls over financial reporting.
Date: May 15, 2012
/s/ Thomas Morgan
Thomas Morgan
Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Digamber Naswa, certify that:
1. I have reviewed this report on Form 10-Q of Infrastructure Developments Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and
internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)
for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls over financial reporting.
Date: May 15, 2012
/s/ Digamber Naswa
Digamber Naswa
Chief Financial Officer
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the report on Form 10-Q of Infrastructure Developments Corp., for the quarterly
period ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I,
Thomas Morgan, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) This report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in this report fairly presents, in all material respects, the financial
condition of the registrant at the end of the period covered by this report and results of operations
of the registrant for the period covered by this report.
Date: May 15, 2012
/s/ Thomas Morgan
Thomas Morgan
Chief Executive Officer
This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant
for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This certification shall not
be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (whether made before or after the date of this report),
irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by §906 has been provided to the registrant and will
be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon
request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the report on Form 10-Q of Infrastructure Developments Corp., for the quarterly
period ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof, I,
Digamber Naswa, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) This report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in this report fairly presents, in all material respects, the financial
condition of the registrant at the end of the period covered by this report and results of operations
of the registrant for the period covered by this report.
Date: May 15, 2012
/s/ Digamber Naswa
Digamber Naswa
Chief Financial Officer
This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant
for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This certification shall not
be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (whether made before or after the date of this report),
irrespective of any general incorporation language contained in such filing.
A signed original of this written statement required by §906 has been provided to the registrant and will
be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon
request.
|
INFRASTRUCTURE DEVELOPMENTS CORP AUDITED CONSOLIDATED BALANCES PERIODS ENDED MARCH 31, 2012 AND DECEMBER 31, 2011 (USD $)
|
Mar. 31, 2012
|
Dec. 31, 2011
|
|---|---|---|
| Assets, Current | ||
| Cash and Cash Equivalents, at Carrying Value | $ 18,319 | $ 42,690 |
| Prepaid Expense, Current | 24,073 | 32,406 |
| Other Assets, Current | 21,141 | 14,709 |
| Assets, Current | 63,533 | 89,805 |
| Assets | 63,533 | 89,805 |
| Liabilities, Current | ||
| Accounts Payable, Current | 45,260 | 27,856 |
| Accrued Liabilities, Current | 47,452 | 40,079 |
| Notes Payable, Current | 304,426 | 328,226 |
| Liabilities, Current | 397,138 | 396,161 |
| Liabilities | 397,138 | 396,161 |
| Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | ||
| Additional Paid in Capital, Common Stock | 8,480,320 | 8,473,865 |
| Retained Earnings (Accumulated Deficit) | (9,135,233) | (9,080,484) |
| Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (333,605) | (306,357) |
| Liabilities and Equity | $ 63,533 | $ 89,805 |
|
Organization, Consolidation and Presentation of Financial Statements
|
3 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mar. 31, 2012
|
|||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements | |||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | NOTE 1 - ORGANIZATION AND HISTORY
Infrastructure Developments Corp. (the “Company”), was incorporated in Nevada as “1st Home Buy & Sell Ltd.” on August 10, 2006, to operate as a real estate company. The Company changed its name from “1st Home Buy & Sell Ltd.” to “Infrastructure Developments Corp.” on March 1, 2010, while evaluating possible business combinations, acquisitions or development opportunities.
On April 14, 2010, the Company and Intelspec International Inc. (“Intelspec”), a Nevada corporation, (now known as "Intelspec International Inc.") executed a stock exchange agreement, whereby the Company agreed to acquire 100% of the issued and outstanding shares of Intelspec in exchange for 14,000,000 shares of the Company’s common stock. Because the owners of Intelspec became the principal shareholders of the Company through the transaction, Intelspec is considered the acquirer for accounting purposes and this transaction is accounted for as a reverse acquisition or recapitalization of Intelspec. Following the closing of the share exchange agreement, the Company's principal business became that of Intelspec. On April 26, 2010, the Company disclosed the information that would have been required if it were filing a general form for registration of securities on Form 10, as required under Item 2.01(f) of Form 8-K, thereby removing its status as a “shell” company.
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.
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 March 31, 2012.
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 March 31, 2012, 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.
l. Impairment of Long-Lived Assets
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 March 31, 2012, $0 was written off from the Company’s long-lived assets.
m. 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
On March 15, 2011, June 1, 2011 and March 7, 2012 the Company had issued promissory notes in the amounts of $60,000, $40,000 and $19,000 respectively, to Asher Enterprises, Inc., an unrelated party, at an interest rate of 8%, with an option to convert the outstanding balance into shares of the Company’s common stock with a discount off the market price at the time of conversion. At March 30, 2012, $71,400 has remained outstanding under the notes.
Additionally, 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. Due to 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, Intelspec and those shareholders of Intelspec 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 Intelspec’s common stock from the shareholders of Intelspec 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 Intelspec 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.
NOTE 8 – RELATED PARTY TRANSACTIONS
The Company had no payables to related parties as of March 31, 2012
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 June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income, Presentation of Comprehensive Income and in December 2011, the FASB issued ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other comprehensive Income in ASU 2011-05 to increase the prominence of items reported in other comprehensive income. Specifically, the new guidance allows an entity to present components of net income or other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the consolidated statement of shareholders' equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. We adopted this guidance on January 1, 2012 and have presented a new financial statement titled Condensed Consolidated Statement of Comprehensive Income for the three month periods ending March 31, 2012 and April 2, 2011.
NOTE 11- STOCK HOLDERS' 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. Issued
b. Issued (Continued)
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 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 has determined that the following such event warrants disclosure or recognition in the financial statements:
* Includes $2,400 in interest on the note. |
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Statement of Financial Position - Parenthetical Infrastructure Developments Corp. March 31, 2012 (USD $)
|
Mar. 31, 2012
|
Dec. 31, 2011
|
|---|---|---|
| Preferred Stock, Par Value | $ 0 | |
| Preferred Stock, Shares Authorized | 0 | |
| Preferred Stock, Shares Issued | 0 | |
| Preferred Stock, Shares Outstanding | 0 | |
| Common Stock, Par Value | $ 0.001 | $ 0.001 |
| Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
| Common Stock, Shares Issued | 321,307,669 | 120,000,000 |
| Common Stock, Shares Outstanding | 178,692,331 | 321,307,669 |
| Common Stock, Value, Outstanding | $ 321,308 | $ 300,263 |
|
Document and Entity Information (USD $)
|
3 Months Ended | ||
|---|---|---|---|
|
Mar. 31, 2012
|
May 15, 2012
|
Apr. 13, 2012
|
|
| Document and Entity Information | |||
| Entity Registrant Name | INFRASTRUCTURE DEVELOPMENTS CORP. | ||
| Document Type | 10-Q | ||
| Document Period End Date | Mar. 31, 2012 | ||
| Amendment Flag | false | ||
| Entity Central Index Key | 0001389415 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Common Stock, Shares Outstanding | 349,479,764 | ||
| Entity Public Float | $ 125,827,679 | ||
| Entity Filer Category | Smaller Reporting Company | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Well-known Seasoned Issuer | No | ||
| Document Fiscal Year Focus | 2012 | ||
| Document Fiscal Period Focus | Q1 |
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