Inspired Builders, Inc.
Notes to Financial Statements
For the Years Ended September 30, 20122013 and September 30, 20112012
1. Nature of Operations
Inspired Builders, Inc., a Nevada Corporation, (the “Company”) was located in Boston, Massachusetts. On January 13, 2012, pursuant to the change of control transaction previously disclosedincorporated in the Company’s filing on Form 10-K dated asState of January 13, 2012, we relocatedNevada in February 2010. The Company is a construction company that specializes in residential home repair and home improvements. The Company contracts with homeowners to Santa Monica, California. Until the recent change of control transaction, we focused on repairing and providingbuild custom home improvements, including shelving for the homeowners.
Going forward, we expect to redirectclosets, bathroom remodeling, upgrading home entertainment centers and replacing flooring. In May 2013, the Company’s focusboard of directors determined that conversion of the Company’s corporate status to acquiring, investing in, developing and managing real estate properties and related investments. Any such efforts will require substantial financial and management resources, which the Company does not currently possess. Therefore, while we will seek to acquire these resources asthat of a part of our business plans, there can be no assurance of our success, and therefore, in our ability to enter the real estate investment or any other market. trust (a “REIT”) would best support the company’s strategic direction. Accordingly, the board passed and adopted a resolution for the Company to be treated as a REIT. As of February 28, 2014, the Company has not completed the necessary filings to change its status with the Internal Revenue Services.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following; estimates of the probability and potential magnitude of contingent liabilities, and the valuation allowance for deferred tax assets due to continuing operating losses.losses, valuation of shares issued in connection with the purchase of real estate, the valuation of the real estate and the evaluation of any impairment on the real estate.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.
Cash
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at September 30, 20122013 and 2011.
2012.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.
Fair Value of Financial Instruments
For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts of cash, loan payable, and accounts payable and accrued expenses reported in the balance sheets are estimated by management to approximate fair value at September 30, 20122013 and September 30, 2011.2012.
Revenue Recognition
The Company records revenue for services rendered when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product/service is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured.
Income Taxes
The Company accounts for income taxes in accordance with generally accepted accounting principles which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between financial statement and income tax bases of assets and liabilities that will result in taxable income or deductible expenses in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period adjusted for the change during the period in deferred tax assets and liabilities.
The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (FASB) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of September 30, 20122013 and September 30, 2011,2012, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. All tax returns from fiscal years 20082010 to 20112013 are subject to IRS audit.
Earnings per share
In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company did not have any potential common stock equivalents at September 30, 20122013 and 2011.2012.
Recent accounting pronouncements
In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” (“ASU 2011-04”). This standard results in a common requirement between the FASB and the International Accounting Standards Board for measuring fair value and disclosing information about fair value measurements. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this accounting pronouncement did not have any effect on our financial position and results of operations.
All other newRecent accounting pronouncements issued butby the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC, did not, yet effective or adopted have been deemed not to be relevant to us, hence are not expectedbelieved by management, to have anya material impact once adopted.
date.on the Company’s present or future financial statements.
3. Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $228,980$137,399 and net cash used in operations of $263,951$61,628 for the year ended September 30, 2012.2013. In addition, the Company has not had construction revenues since May 2011 and the only prospect for positive cash flow is through the issuance of common stock or debt.
The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. There is no plan or knowledge of any tangible financing source or discussions with any investors to raise additional capital. If the Company does not begin to generate sufficient revenue or raise additional funds through a financing, the Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. The Company will require additional funding to finance the growth of its future operations as well as to achieve its strategic objectives. This raises substantial doubt about its ability to continue as a going concern. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable toability of the Company if at all.
The accompanying financial statements have been prepared onto continue as a going concern basis, which contemplatesis dependent on the realization of assetsCompany’s ability to raise additional capital and the satisfaction of liabilities in the normal course of business. Thesegenerate revenue. The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary shouldif the Company beis unable to continue as a going concern.
4. Note PayableReal Estate
On January 10, 2011June 24, 2013, the Company borrowed $3,000 pursuantentered into an agreement with a related party to purchase a parcel of undeveloped land in Duval County, Florida. The purchase price for the Duval property was $1,350,000, payable as $750,000 by the Company’s delivery of its 3% note payable. On November 16, 2011and mortgage, due June 15, 2014. The $600,000 balance of the Company borrowed an additional $2,000 pursuantpurchase price was paid by approving the issuance to a note payable under the same terms. In January 2012 an additional $4,500seller of 100,000 shares of the Company’s common stock. The $0.001 par value per share was advanced undervalued by the same terms. The loan is payable one year fromparties at $6.00 per share, based on the closing price of the stock on the date of issuance and accrues interestthe closing. In accordance with SAB 7310.1, transfers of nonmonetary assets for stock or other consideration of the registrant are recorded at a ratethe predecessor cost. Accordingly, the Company recorded the value of 10% per annum. On January 12, 2012 the loan amountreal estate acquired at the historical basis of $9,500 and accrued interest of $316 were repaid.
5. NoteEmployment Agreement
On September 1, 2013 the Company entered into a three year employment contract with its CEO. The CEO is to be paid $10,000 per month plus reimbursement for expenses and bonuses as determined by the board. The CEO will be entitled to one week paid vacation and is subject to a one year non-compete agreement at the end of the employment contract. As of September 30, 2013, the Company has accrued $10,000, for amounts due to the CEO.
6. Mortgage Payable – Related Party
On June 24, 2013 the Company entered into an agreement with a related party to purchase a parcel of undeveloped land in Duval County, Florida. The purchase price for the Duval property was $1,350,000, payable as $750,000 by the Company’s delivery of its 3% note and mortgage, due June 15, 2014. The $600,000 balance of the purchase price was paid by approving the issuance to the seller of 100,000 shares of the Company’s common stock. The $0.001 par value per share was valued by the parties at $6.00 per share, based on the closing price of the stock on the date of the closing. As of September 30, 2013 the Company has accrued interest of $6,125 due on the mortgage.
7. Notes Payable – Related Parties
On January 13, 2012 the Company entered into a 12 month unsecured promissory note in the amount of $211,000. Interest shall accrueaccrues in arrears on the principal of this Note outstanding from time to timeprincipal at the rate of ten percent (10.00%) per annum. Interest shall be payable on the last day of each quarter, commencing March 30, 2012, and continuing until the Maturity Date.maturity date. Should Makerthe maker fail to pay the entire Loanprincipal and accrued interest by the Maturity Date, Makermaturity date, the maker agrees that the interest rate shall increase to Twelvetwelve percent (12.00%) per annum. On May 10, 2013, the Company and the related party agreed to extend the maturity of the loan for an additional year or until January 13, 2014. The loan maturity dates were further extended to January 13, 2015 on January 13, 2014. On May 22, 2012, the Company borrowed an additional $32,714 from the related party, with the same terms. On September 17, 2012, the Company borrowed an additional $22,033 from the related party, with the same terms. On February 7, 2013, the Company borrowed an additional $28,773 from the related party, with the same terms, and on July 31, 2013, the Company borrowed an additional $30,000 from the related party, with the same terms. The total outstanding principal at September 30, 2013 amounted to $324,529. Accrued interest at September 30, 2013, and September 30, 2012, amounted to $16,341.$45,768 and $16,341, respectively.
8. Stockholders’ Equity
On FebruaryJune 24, 2010 (inception),2013, the Company issued 10,000,000approved the issuance of 100,000 shares of common stock to a related party as partial consideration for the founder ($0.001/share).purchase of real estate. The Company expensedshares were valued at the $10,000 immediately.historical cost of the consideration given. The difference between the historical cost and the consideration paid was treated as a return of capital of $442,496.
During fiscal year 2010, the Company issued 250,000 shares of common stock for proceeds of $2,500 ($0.01/share).9. Income Taxes
During fiscal year 2011, the Company issued 650,000 shares of common stock for proceeds of $6,500 ($0.01/share).Provision for income taxes is comprised of the following: | | | | | | |
| | | | | | |
| | September 30, 2013 | | | September 30, 2012 | |
| | | | | | |
Current tax expense: | | | | | | | | |
Federal | | $ | 0 | | | $ | 0 | |
State | | | 0 | | | | 0 | |
Total | | $ | 0 | | | $ | 0 | |
During fiscal year 2011, the Company issued 125,000 shares of common stock to consultants for services rendered valued at $1,250 ($0.01/share).A reconciliation of provision for income taxes at the statutory rate to provision for income taxes at the Company's effective tax rate is as follows: |
| | | | | |
Statutory U.S. federal rate | | | 34 | % | | | 34 | % |
Statutory state income tax | | | 5.83 | % | | | 0% | |
Less valuation allowance | | | (39.83 | )% | | | (34 | )% |
Effective rate | | | 0 | % | | | 0 | % |
| | | | | | | | |
Deferred income taxes are comprised of the following: | | | | | | | | |
| | | | | | | | |
Tax loss carryforwards | | $ | 172,232 | | | $ | 119,332 | |
Less valuation allowance | | | (172,232 | ) | | | (119,332 | ) |
Deferred tax benefit | | $ | 0 | | | $ | 0 | |
7.The increase in the valuation allowance for the year ended September 30, 2013 was an increase of $52,900.
10. Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affecteffect on its business, financial condition or operating results.
Provision for income taxes is comprised of the following: | | | | | | |
| | | | | | |
| | | | | | |
Net loss before provision for income taxes | | $ | (228,980 | ) | | $ | (58,000 | ) |
| | | | | | | | |
Current tax expense: | | | | | | | | |
Federal | | $ | 0 | | | $ | 0 | |
State | | | 0 | | | | 0 | |
Total | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Less deferred tax benefit: | | | | | | | | |
Tax loss carryforwards | | | (119,332 | ) | | | (19,918 | ) |
Allowance for recoverability | | | 119,332 | | | | 19,918 | |
Provision for income taxes | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
A reconciliation of provision for income taxes at the statutory rate to provision | | | | | |
for income taxes at the Company's effective tax rate is as follows: | | | | | |
| | | | | | | | |
Statutory U.S. federal rate | | | 34 | % | | | 34 | % |
Statutory state and local income tax | | | 10 | % | | | 10 | % |
Less allowance for tax recoverability | | | -44 | % | | | -44 | % |
Effective rate | | | 0 | % | | | 0 | % |
| | | | | | | | |
Deferred income taxes are comprised of the following: | | | | | | | | |
| | | | | | | | |
Tax loss carryforwards | | $ | 119,332 | | | $ | 19,918 | |
Allowance for recoverability | | | (119,332 | ) | | | (19,918 | ) |
Deferred tax benefit | | $ | 0 | | | $ | 0 | |
9.11. Concentration of Credit Risk
The Company relies heavily on the support of its president and majority shareholder. A withdrawal of this support, for any reason, will have a material adverse affecteffect on the Company’s financial position and its operations.
10.12. Related Party Transaction
On May 22, 2012 the Company borrowed $32,714 from the related party at 10% interest due on demand. On September 17, 2012 the Company borrowed an additional $22,033 from the same related party with the interest at 10% due on demand.
On January 13, 2012 the Company entered into a 12 month unsecured promissory note in the amount of $211,000 with a related party.$211,000. Interest shall accrueaccrues in arrears on the principal of this Note outstanding from time to timeprincipal at the rate of ten percent (10.00%) per annum. Interest shall be payable on the last day of each quarter, commencing March 30, 2012, and continuing until the Maturity Date.maturity date. Should Makerthe maker fail to pay the entire Loanprincipal and accrued interest by the Maturity Date, Makermaturity date, the maker agrees that the interest rate shall increase to Twelvetwelve percent (12.00%) per annum.
10. Subsequent Events
annum. On May 10, 2013, the Company and the related party agreed to extend the maturity of the loan for an additional year or until January 13, 2014. The loan maturity dates were further extended to January 13, 2015 on January 13, 2014. On May 22, 2012, the Company has made a review of material subsequent eventsborrowed an additional $32,714 from the related party, with the same terms. On September 17, 2012, the Company borrowed an additional $22,033 from the related party, with the same terms. On February 7, 2013, the Company borrowed an additional $28,773 from the related party, with the same terms, and on July 31, 2013, the Company borrowed an additional $30,000 from the related party, with the same terms Total outstanding principal at September 30, 2013 amounted to $324,529. Accrued interest at September 30, 2013, and September 30, 2012, through the date of this reportamounted to $45,768 and found the following material subsequent events reportable during this period:$16,341, respectively.
On June 24, 2013 the Company entered into an agreement with a related party to purchase a parcel of undeveloped land in Duval County, Florida. The purchase price for the Duval property was $1,350,000, payable as $750,000 by the Company’s delivery of its 3% note and mortgage, due June 15, 2014. The $600,000 balance of the purchase price was paid by approving the issuance to the seller of 100,000 shares of the Company’s common stock. In accordance with SAB 7310.1, transfers of nonmonetary assets for stock or other consideration of the registrant are recorded at the predecessor cost. Accordingly, the Company recorded the value of the real estate acquired at the historical basis of $307,504. As of September 30, 2013 the Company recorded accrued interest of $6,125
On September 1, 2013 the Company entered into a three year employment contract with its CEO. The CEO is to be paid $10,000 per month plus reimbursement for expenses and bonuses as determined by the board. The CEO will be entitled to one week paid vacation and is subject to a one year non-compete agreement at the end of the employment contract. As of September 30, 2013, the Company has accrued $10,000, for amounts due to the CEO.
13. Subsequent Events
On November 14, 2013, a related party advanced the Company $19,960 for working capital.
On November 13, 2013, a related party entered into an unsecured note payable for $25,000 with an interest rate of 10% due November 13, 2014.
On December 20, 2013, a related party advanced the Company $2,500 for working capital.
On January 13, 2014, a related party entered into an unsecured note payable for $3,352 with an interest rate of 5% due January 13, 2015.
On January 7, 2014, a related party advanced the Company $5,000 for working capital.
On January 24, 2014, a related party advanced the Company $10,000 to pay for 1 months salary to our Chief Executive Officer.
In December 2013 the Company entered into a Joint Venture Agreement with Development Property Holdings, Inc. a California corporation, to enter into and become a Florida joint venture for the purpose of acquiring certain commercial real property in the State of Florida. The Joint Venture will be vested 50% by each partner and all decisions, costs, expenses and profits will be divided evenly between the two partners. To date, the Joint Venture has not executed and closed on any properties and is still searching for its first project.
On February 7, 2014, the Company issued 100,000 shares to the seller of the property, a related party, which closed on June 24, 2013.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. |
None.
Item 9A. Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) (the Company’s principal executive officer) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2012.2013. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of September 30, 2012,2013, the Company’s internal control over financial reporting was not effective for the purposes for which it is intended.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over our financial reporting as of September 30, 2013 the Company determined that the following items constituted a material weakness:
| · | The Company does not currently have an active Chief Financial Officer to oversee the day to day transactions and operations, which ensures the timely and accurate identification and reporting of all necessary transactions. |
| | |
| · | The Company does not have an independent audit committee that can review and approve significant transactions and the reporting process and provide independent oversight of the Company. |
| | |
| · | The Company is dependent on related parties for funding and decision making, which is provided on a very limited basis, therefore accurate accounting, record retention and financial disclosures are not performed in a timely and efficient manner. |
| | |
| · | The Company failed to issue shares approved for issuance as part of the purchase of property, which closed in June 2013. |
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm as we are a smaller reporting company and not required to provide the report.
Changes in Internal ControlControls over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.In December 2013 the Company entered into a Joint Venture Agreement with Development Property Holdings, Inc. a California corporation, to enter into and become a Florida joint venture for the purpose of acquiring certain commercial real property in the State of Florida. The Joint Venture will be vested 50% by each partner and all decisions, costs, expenses and profits will be divided evenly between the two partners. To date, the Joint Venture has not executed and closed on any properties and is still searching for its first project.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth the name and age of our sole officerofficers and director as of January 15, 2013, immediately prior to the filing of this Annual Report on Form 10-K.September 30, 2013. Our Executive Officers are appointed by our Board of Directors and hold their offices until they resign or are removed by the Board. Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.
Name | | Age | | Position |
Carlos P. SalasMatthew Nordgren | 42 | 30 | | Chief Executive Officer, Chief Operating Officer and Director |
Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years.
Carlos P. Salas,Matthew Nordgren, age 30, has served as the Chief Executive Officer
of Nordco Consulting since he founded it in February 2009. From 2007 to 2010, Mr. Salas is an ExecutiveNordgren has been a partner and Vice President Direct Investments of COR Capital Corporation. Previously,Schlegel Woy Management. Since 2008, Mr. Nordgren has been the Texas President of VEEV, where he co-founded Dolphin Direct Equity Partners, LP, a New York-based private-equity fund focused on structured debtis responsible for marketing, distribution, and equity investments in small-market companies. Prior to forming Dolphin,sales within the State of Texas. Since 2002, Mr. SalasNordgren has served as CFO of a private capital equipment manufacturer to lead its financial and operational restructuring. Before this assignment, he was an investment banker with Donaldson, Lufkin & Jenrette,executive at Nordco, Inc. and Credit Suisse First Boston, each in Los Angeles, providing M&A and corporate-finance advice to middle-market companies. Mr. Salas is a member of the State Bar of California and practiced law with Cleary, Gottlieb, Steen & Hamilton in New York,, where he advised clientsis responsible for corporate development and marketing strategies. Mr. Nordgren received his B.A. in connection with debt and equity issuances and cross-border M&A transactions. In addition, he has served ongovernment from the boards of directors of several public and private companies, and currently serves on the board of Williams Controls, Inc. Mr. Salas is a graduate of The University of Chicago (J.D.) and New York University (B.A.)Texas.
Director Independence and Board Committees
We do not have any independent directors on our board of directors. Our board of directors solely consists of Carlos Salas,Brendan Powderly, our Chief Executive Officer, who is not independent. Our board of directors does not have any committees, as companies whose securities are traded on the OTC Bulletin Board are not required to have board committees. However, if, at such time in the future, we appoint independent directors on our board we expect to form the appropriate board committees.
We currently do not have a standing audit, nominating or compensation committee. Our board of directors handles functions that would otherwise be handled by each of the committees. We believe that there is not a need for a nominating committee at this time because our board of directors consists of solely one director who is not independent and who is the only decision maker. At such point when we have independent board of directors we will need to establish a nomination committee.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Code of Ethics
We have not adopted a code of ethics that applies to our principal executive officer and principal financial officer. We intend to adopt a Code of Ethics as we develop our business.
Item 11. Executive Compensation.
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us for fiscal 2012year 2013 and fiscal 2011.year 2012.
SUMMARY COMPENSATION TABLE
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Non-Qualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Totals ($) | |
Carlos Salas, | | 2011 | | $ | 0 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 0 | | $ | 0 | |
Chief Executive Officer, Chief Operating Officer | | 2012 | | $ | 0 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 0 | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Brendan Powderly, | | 2011 | | $ | 0 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 10,293(3) | | $ | 10,293 | |
Former Chief Executive Officer(2) | | 2012 | | $ | | | | | | | | | | | | | | | $ | | | $ | | |
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Non-Qualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Totals ($) | |
Matthew Nordgren, | | 2013 | | $ | 10,000 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 0 | | $ | 10,000 | |
Chief Executive Officer (1) | | 2012 | | $ | 0 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 0 | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Carlos Salas, | | 2013 | | $ | 0 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 0 | | $ | 0 | |
Chief Executive Officer, Chief Operating Officer (2) | | 2012 | | $ | 0 | | 0 | | | 0 | | 0 | | | 0 | | 0 | | $ | 0 | | $ | 0 | |
(1) | Brendan Powderly resigned | Matthew Nordgren was appointed as a result of the change of control transactionChief Executive Officer on January 13, 2012.February 22, 2013. |
(2) | Represents personal expenses paid for by | Carlos Salas resigned on February 22, 2013 as the Chief Executive Officer and director of the Company. |
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Employment Agreements
None.On September 1, 2013, the Company approved an employment agreement for Matthew Nordgren. Pursuant to the employment agreement, Mr. Nordgren shall be paid $10,000 per month and is eligible for an annual bonus in stock or cash. The term of the employment agreement is for 3-years. A copy of the Employment Agreement is attached hereto as Exhibit 10.1.
Pursuant to the terms of the change of control, Mr. Powderly terminated any employment agreement he had with the Company and waived any rights to any payments due to him under this employment agreement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of January 14, 2013,February 25, 2014, and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown.
Name | | Number of Shares Beneficially Owned | | | Percent of Class (1) | |
| | | | | | | | |
Executive Officers and Directors | | | | | | | | |
Carlos P. Salas; 233 Wilshire Boulevard, Suite 830, Santa Monica, CA 90401 | | | 0 | | | | | * |
All Executive Officers and Directors as a group (1 person) | | | 0 | | | | 0 | % |
5% Shareholders | | | | | | | | |
Brendan Powderly; 288 North Street, Georgetown, Massachusetts 01833 | | | 10,000,000 | | | | 90.70 | % |
Name | | Number of Shares Beneficially Owned | | | Percent of Class (1) | |
Matthew Nordgren; 233 Wilshire Boulevard, Suite 830, Santa Monica, CA 90401 | | | 0 | | | | | * |
All Executive Officers and Directors as a group (1 person) | | | 0 | | | | * | % |
Swan Associates Group, LLC | | | 3,508,333 | | | | 31.536 | % |
* denotes ownership of less than 1%.
(1) | Based on 11,025,00011,125,000 shares of common stock outstanding as of January 15, 2013 February 25, 2014. |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
NoneOther than the above, none of the following persons has any direct or indirect material interest in any transaction to which we are a party since our incorporation or in any proposed transaction to which we are proposed to be a party:
| (A) | Any of our directors or officers; |
| (B) | Any proposed nominee for election as our director; |
| (C) | Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our common stock; or |
| (D) | Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of our company. |
Director Independence
We do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
● | the director is, or at any time during the past three years was, an employee of the company; |
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● | the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service); |
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● | a family member of the director is, or at any time during the past three years was, an executive officer of the company; |
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● | the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); |
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● | the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or |
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● | the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit. |
Carlos SalasMatthew Nordgren is not considered independent because he is an executive officer of the Company.
We do not currently have a separately designated audit, nominating or compensation committee.
Item 14. Principal Accounting Fees and Services.
Audit Fees
For the Company’s fiscal year ended September 30, 2013 and 2012, we have incurred $6,500$25,000 and $6,000, respectively, for professional services rendered for the audit and reviews of our financial statements.
All Other Fees (including, Audit Related Fees and Tax Fees)
None.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:
● | approved by our audit committee; or |
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● | entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management. |
We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors.
The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records addressing the percentage of pre-approved audit fees. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
PART IV
ITEMItem 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.Exhibits, Financial Statement Schedules.
(a) Documents filed as part of this Annual Report
1. Financial Statements
2. Financial Statement Schedules
3. Exhibits
Exhibit No.10.1 | | | Title of DocumentEmployment Agreement for Matthew Nordgren |
10.2 | | | Purchase and Sale Agreement between the Company for the Duval property (1) |
10.3 | | | Assignment of Special Warranty Deed to the Duval Property (1) |
10.4 | | | Secured $750,000 promissory note of the Company (1) |
10.5 | | | Mortgage and Security Agreement on the Duval property (1) |
10.6 | | | Joint Venture Agreement between Inspired Builders, Inc. and Development Property Holdings, Inc. dated December 10, 2013. |
31.1 | | | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | | | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to Rule 13a-14(b) of the Exchange Act and18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 20022002. |
| | | |
101.INS | * | | XBRL Instance Document |
101.SCH | * | | XBRL Taxonomy Schema |
101.CAL | * | | XBRL Taxonomy Calculation Linkbase |
101.DEF | * | | XBRL Taxonomy Definition Linkbase |
101.LAB | * | | XBRL Taxonomy Label Linkbase |
101.PRE | * | | XBRL Taxonomy Presentation Linkbase |
| (1) | Referred to and incorporated by reference to the Current Report on Form 8-K filed on June 24, 2013. |
In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INSPIRED BUILDERS, INC. | |
| | | |
Date: January 15, 2013Date : March 5, 2014 | By: | /s/ Carlos SalasMatthew Nordgren | |
| | Carlos SalasMatthew Nordgren
Chief Executive Officer and Chief Financial Officer | |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | | Capacity | | Date |
| | | | |
/s/ Carlos SalasMatthew Nordgren | | Chief Executive Officer (Principal Executiveand Chief Financial Officer | | January 15, 2013March 5, 2014 |
Carlos SalasMatthew Nordgren | | Officer), President(Principal Executive Officer and Principal Financial Officer) and Sole Director | | |
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