ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Description of Business
We were incorporated in the State of Nevada on June 2, 2010 under the name “Indigo International, Corp.”
Since November 2012, our business strategy has been focused on the acquisition and rehabilitation of distressed residential real estate in the United States. On December 4, 2012, our majority shareholder and our sole director approved an amendment to our Articles of Incorporation for the purpose of changing our name to “Berkshire Homes, Inc.”
Our office is currently located at 2375 East Camelback Road, Suite 600, Phoenix, AZ 85016. Our telephone number is 602-387-5393.
On January 11, 2013, we filed an Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada in order to, among other things, change our authorized capital stock to Five Hundred and Twenty Million (520,000,000) shares, consisting of Five Hundred Million (500,000,000) shares of Common Stock, $0.0001 par value per share and Twenty Million (20,000,000) shares of “blank-check” Preferred Stock, $0.0001 par value per share.
Results of Operations
We are a development stage company incorporated on June 2, 2010. From our inception to February 28, 2013, we generated revenue of $22,000 and accumulated deficit of $1,067,268 from our prior consultation business which ceased in November 2012. We cannot guarantee we will be successful in developing and expanding our business. Our business is subject to risks inherent in the establishment of a new business enterprise including limited capital resources.
We anticipate that we will continue to incur losses in the next 12 months. Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional financing to meet our long term operating requirements through the sale of equity and/or debt securities among other options.
There is no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Three Months Ended February 28, 2013 Compared to Three Months Ended February 29, 2012
Our net loss for the three months ended February 28, 2013 was $87,925, a decrease of $12,582 or 12.52% from a net loss of $100,507 during the three months ended February 29, 2012. The decrease was due to our decreased operating expenses.
During the three months ended February 28, 2013 and February 29, 2012, we did not generate revenue.
During the three months ended February 28, 2013, we incurred operating expense of $70,875, a decrease of $27,309 or 27.81% from $98,184 during the three months ended February 29, 2012. Our consulting fees decreased by $15,875 or 94.07% from $16,875 for the three months ended February 29, 2012 to $1,000 for the three months ended February 28, 2013 as we incurred significant expenses in 2012 searching for business opportunities and human resources. Our general and administrative expenses decreased by $7,403 or 31.78% from $23,296 for the three months ended February 29, 2012 to $15,893 for the three months ended February 28, 2013 we streamlined our operations as in 2013. Professional fees increased from $6,250 for the three months ended February 29, 2012 by $35,232 or 563.71% to $41,482 for the three months ended February 28, 2013 largely due to our legal costs incurred in 2013 in connection with our Form S-1 amendment filings, officer and director changes, business changes, as well as amended and restated Article of Incorporation. Management fees decreased from $51,763 for the three months ended February 29, 2012 by $39,263 or 75.85% to $12,500 for the three months ended February 28, 2013 as we paid management fees for one month during the three months ended February 28, 2013 but for three months during the three months ended February 29, 2012.
During the three months ended February 28, 2013 we incurred interest expense of $17,050 on four promissory notes with total principal amount of $500,000. During the three months ended February 29, 2012 we incurred interest expense of $2,323 on two promissory notes with total principal amount of $200,000.
Liquidity and Capital Resources
As at February 28, 2013, we had current assets of $50,487 and current liabilities of $1,094,155.
As at November 30, 2012, we had no assets and current liabilities of $955,743.
We financed our operations during the three months ended February 28, 2013 through the sale of one promissory note for total proceeds of $100,000. We financed our operations during the three months ended February 29, 2012 through the sale of two promissory notes for total proceeds of $200,000.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through further issuances of equity securities or debt financing. Our working capital requirements are expected to increase in line with the growth of our business.
We have generated revenue of $22,000 to date. We are still a development stage corporation.
Over the next twelve months we believe we will need $250,000 to carry out our ongoing operations and to expand our operations which will come from funds currently available and additional financing.
Recent Accounting Pronouncements
See Note 1 to the Financial Statements.
Off-balance Sheets Arrangements
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
We have funded our initial operations through the issuance of 4,510,000 shares of capital stock for net proceeds of $23,600, the sale of four promissory notes in the aggregate principal amount of $500,000, and cash proceeds of $19,875 generated from providing consulting service from inception to date. Due to the uncertainty of our ability to generate sufficient revenues from our operating activities and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, in their report on our financial statements for the fiscal year ended November 30, 2012, our registered independent auditors included additional comments indicating concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our registered independent auditors. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Management plans to continue to seek financing on favorable terms; however, there is no assurance that such financing can be obtained on favorable terms. If we are unable to generate sufficient revenue or obtain additional funds for our working capital needs, we may need to cease or curtail operations.
