IFLM Independent Film Development Corporation (CE)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

_X_	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended March 31, 2015
____	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period From                          to                        

 

 

INDEPENDENT FILM DEVELOPMENT CORPORATION

(Name of small business issuer specified in its charter)

 

Nevada	56-2676759
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
2732 Morse Avenue, Suite #413 Irvine, CA	92614
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: (646) 480-0770   (Former address of principle offices)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes  x       No  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 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 x   No ¨   

 

Indicate by check mark whether the registrant is a large accelerated filer, a non–accelerated filer, or a smaller reporting company.   See definitions of large accelerated filer, accelerated filer and smaller reporting company in Section 12b-2 of the Exchange Act.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨     No x

 

As of May 15, 2015, the issuer had 1,746,452,866 shares of common stock outstanding.

 

Transitional Small Business Disclosure Format:    Yes    ¨      No   x

 

 

 

 

 

 

 

 

Independent Film Development Corporation

FORM 10-Q

For the Quarterly Period Ended March 31, 2015

INDEX

  

PART I	Financial Information	4
Item 1.	Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19
PART II	Other Information	19
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
Signatures		23

  

 

 

 

 

 

 

 

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

TABLE OF CONTENTS

 

 

Balance Sheets as of March 31, 2015 and September 30, 2014 (unaudited)	5
Statements of Operations for the three and six months ended March 31, 2015 and 2014 (unaudited)	6
Statements of Cash Flows for the six months ended March 31, 2015 and 2014 (unaudited)	7
Notes to the Financial Statements (unaudited)	8

 

 

 

 

 

 

 

 

 

 

 

Independent Film Development Corporation
Balance Sheets
		March 31, 2015			September 30, 2014
ASSETS		(unaudited)
Cash	$	9,759		$	13,855
Restricted cash		-			68,125
Other current assets		-			33,375
Total Assets	$	9,759		$	115,355
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and other accruals	$	121,756		$	158,299
Accrued officer compensation		722,350			634,700
Accrued interest and penalties		337,628			326,035
Advances from officers		-			8,687
Notes payable		44,937			18,550
Derivative liability		182,374			183,648
Convertible debentures (net of discount of $13,498 and $92,354, respectively)		71,502			86,146
Convertible debentures in default		160,135			86,050
Total Liabilities		1,640,682			1,502,115
Stockholders' Equity (Deficit):
Preferred Stock, $.0001 par value, 10,000,000    shares authorized, none issued and outstanding		-			-
Series A Preferred Stock, $.0001 par value, 5,000,010   shares authorized, 5,000,000 and 0 issued and outstanding, respectively		500			-
Common stock, $.00001 par value, 2,000,000,000 shares authorized, 1,680,892,866 and 94,292,866 issued and outstanding, respectively		16,809			943
Additional paid in capital		8,690,600			5,423,074
Common stock payable		38,000			38,000
Accumulated deficit		(10,376,832)			(6,848,777)
Total Stockholders' Equity (Deficit)		(1,630,923)			(1,386,760)
Total Liabilities and Stockholders' Equity  (Deficit)	$	9,759		$	115,355
The accompanying notes are an integral part of these financial statements.

 

 

Independent Film Development Corporation Statements of Operations (unaudited)
		For the Six Months Ended						For the Three Months Ended
		March 31,						March 31,
		2015			2014			2015		2014
Revenue	$	-		$	-		$	-	$	-
Operating Expenses:
Officer compensation		231,001			197,350			59,226		142,075
Professional fees		23,836			23,803			18,561		17,378
General and administrative		14,820			188,906			5,054		20,915
Total operating expenses		269,657			410,059			82,841		180,368
Loss from operations		(269,657)			(410,059)			(82,841)		(180,368)
Other income and (expense):
Gain (loss) on derivative liability		(22,788)			179,931			21,841		163,525
Gain on extinguishment of debt		-			1,360,227			-		1,360,227
Loss on settlement of debt		(3,107,500)			-			(3,107,500)		-
Penalty expense		(31,875)			(118,000)			-		(25,000)
Amortization of debt discount		(78,856)			-			(27,640)		-
Interest expense		(17,379)			(54,733)			(9,468)		(12,736)
Total other income (expense)		(3,258,398)			1,367,425			(3,122,767)		1,486,016
Net income (loss)	$	(3,528,055)		$	957,366		$	(3,205,608)	$	1,305,648
Income (loss) per share:
Diluted	$	-		$	0.01		$	-	$	0.01
Basic	$	(0.01)		$	0.01		$	(0.01)	$	0.02
Weighted average shares:
Outstanding diluted		-			81,878,529			-		98,576,432
Outstanding basic		358,192,042			74,924,796			617,231,755		80,587,281

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

Independent Film Development Corporation
Statements of Cash Flows (unaudited)
		For the Six Months Ended
		March 31,
		2015			2014
Cash flows from operating activities:
Net income (loss)		$	(3,528,055)		$	957,366
Adjustments to reconcile net (loss) to total cash used in operations:
Preferred stock for compensation			79,000			49,300
Common stock for compensation			2,000			-
Common stock for other services			-			132,500
(Gain) loss on derivative liability			22,788			(179,931)
(Gain) loss on extinguishment of debt			3,107,500			(1,360,227)
Debt discount amortization			78,856			7,984
Change in assets and liabilities:
Decrease in other assets			33,375			-
Increase (decrease) in accounts payable & accruals			(1,543)			39,945
Increase (decrease) in accounts payable, related party
Increase in accrued expenses			-			164,665
Increase in accrued interest and penalties			15,593			-
Accrued interest, related party						(770)
Increase in accrued compensation			102,650			105,823
Net cash used in operating activities			(87,836)			(83,345)
Cash flows from investing activities			-			-
Cash flows from financing activities:
Cash payments, related party			-			(4,210)
Cash received from convertible notes			20,200			80,000
Payment on convertible notes			(7,585)			-
Payments to officers			-			(6,730)
Proceeds from the sale of common stock			3,000			24,000
Net cash provided by financing activities			15,615			93,060
Net increase (decrease) in cash			(72,221)			9,715
Cash at beginning of period			81,980			2,713
Cash at end of period		$	9,759		$	12,428
Cash paid for:
Interest		$	-		$	770
Taxes		$	-		$	-

 

 

Supplemental disclosure of non-cash activities
Common stock issued for accounts payable and accrued interest		$	39,000		$	-
Debt discount on convertible notes payable		$	-		$	63,826
Common stock issued for stock payable		$	-		$	646,010
Common stock issued for conversion of debt		$	14,330		$	-
Common stock issued for conversion of debt to related parties		$	-		$	70,000
Settlement of derivative liability		$	24,062		$	450,282

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

Independent Film Development Corporation

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

NOTE 1: HISTORY OF OPERATIONS

 

Business Activity

 

Independent Film Development Corporation was incorporated in the State of Nevada on September 14, 2007. Effective April 24, 2008 we commenced operating as a Business Development Company ("BDC") under Section 54(a) of the Investment Company Act of 1940 ("1940 Act").  On September 30, 2009, our board of directors elected to cease operating as a BDC.  

 

The Company’s plan of operations seeks to acquire real estate assets primarily, but not exclusively, in the hospitality space, which present value creation potential due to the complexity or illiquidity of their existing ownership and / or capital structure. In such situations, IFLM will seek to actively work through the complexities, gain control of the asset, actively manage, recapitalize and thereby create value. For those assets lying outside of the hospitality space, IFLM will sell the assets at a price which realizes that value created. For those assets lying within the hospitality space, IFLM will then leverage its film, entertainment and hospitality capabilities to transform the property into genre themed hotels and resorts. The final product will be a paradigm-shifting convergence of hospitality and entertainment, providing guests with a full immersion experience during their stay. Additionally, should any opportunities for content creation/distribution projects present themselves, IFLM will pursue those that align with the company’s strategic vision.

 

On February 6, 2014, the Company created two new subsidiaries, the IFLM LA Realty Fund, LLC and the Hilltop Manor Fund, LLC. The Companies will be used to hold two separate offerings for real estate investment funds.  The net cash proceeds from these two offerings, less working capital expenses, will be used to invest in real estate and/or the costs associated with the acquisition and development of real estate.  The real estate investments under the IFLM LA Realty Fund will focus on undervalued properties on the West Coast of the United States.  The Hilltop Manor Fund will focus on the initial costs associated with the acquisition and development of the Hilltop Manor theme park and resort concept.

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These financial statements should be read in conjunction with the audited financial statements and footnotes for the year ended September 30, 2014 included on the Company’s Form 10-K. The results of the six months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year ending September 30, 2015.

 

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial  statements  which present  fairly  the  financial  condition,  results  of  operations  and  cash  flows  of  the Company for the respective periods being presented.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of March 31, 2015 and September 30, 2014.

 

 

Restricted Cash

 

The Company presents cash balances that are for a specific purpose and therefore not available for immediate and general use by the Company, separately on the balance sheet as restricted cash. As of September 30, 2014, the Company had set aside $68,125 to be used in its IFLM Realty Prime Opportunity Fund. Subsequent to September 30, 2014, the funds have been used for other business purposes.

 

Stock Based Compensation

 

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the 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 earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the Company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument.

 

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation - Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. There has been no stock-based compensation issued to employees.

 

Use of Estimates

 

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Fair Value of Financial Instruments

The carrying amount of cash, notes receivable, accounts payable, accrued liabilities and notes payable, as applicable, approximates fair value due to the short-term nature of these items. The fair value of the related party notes payable cannot be determined because of the Company's affiliation with the parties with whom the agreements exist. The use of different assumptions or methodologies may have a material effect on the estimates of fair values.

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

· Level 1:  Observable inputs such as quoted prices in active markets;

 

· Level 2:  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

· Level 3:  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The following table presents assets and liabilities that are measured and recognized at fair value as of March 31, 2015 and September 30, 2014 on a recurring basis:

 

March 31, 2015

Description		Level 1			Level 2			Level 3			Total Gains and (Losses)
Derivative			-			-			(182,374)			(22,788)
Total		$	-		$	-		$	(182,374)		$	(22,788)

September 30, 2014

Description		Level 1			Level 2			Level 3			Total Gains and (Losses)
Derivative			-			-			(183,648)			96,085
Total		$	-		$	-		$	(183,648)		$	96,085

 

 Income Taxes

 

Accounting Standards Codification Topic No. 740 “Income Taxes” (ASC 740) requires the asset and liability method of accounting be used for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates 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.

 

In June 2006, the FASB interpreted its standard for accounting for uncertainty in income taxes, an interpretation of accounting for income taxes.  This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance the minimum recognition threshold and measurement attributable to a tax position taken on a tax return is required to be met before being recognized in the financial statements. The FASB’s interpretation had no material impact on the Company’s financial statements for the quarter ended March 31, 2015.

 

Derivative Liabilities

 

The Company records the fair value of its derivative financial instruments in accordance with ASC815, Derivatives and Hedging. The fair value of the derivatives was calculated using a multi-nominal lattice model performed by an independent qualified business valuator. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations

 

Derivative financial instruments should be recorded as liabilities in the balance sheet and measured at fair value. For purposes of the Company’s financial statements fair value was used as the basis for formulating an analysis which has been defined by the Financial Accounting Standards Board (“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60. In determining the fair value of the derivatives it was assumed that the Company’s business would be conducted as a going concern. These derivative liabilities will need to be marked-to-market each quarter with the change in fair value recorded in the income statement.

 

 

 

Earnings (Loss) Per Share

 

Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later. The Company has no outstanding options or warrants. Potentially dilutive shares were excluded from the computation as of March 31, 2015 as they would have been anti-dilutive.

 

 

Recent Accounting Pronouncements

 

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted.

 

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The early adoption of ASU 2014-10 is permitted which removed the development stage entity financial reporting requirements from the Company.

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued, that might have a material impact on its financial position or results of operations.

 

NOTE 3: CONVERTIBLE DEBENTURES

 

On April 9, 2012, the Company entered into a $100,000 convertible debenture with Neil Linder. The debenture accrued interest of 12% and matured on April 9, 2013. Mr. Linder has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to the lesser of fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the Common Stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company’s common stock. Based on the initial valuation the Company has recorded a debt discount of $49,532, $15,994 of which was amortized in the fiscal year ended September 30, 2012 with the remaining $33,538 amortized the fiscal year ended September 30, 2013. During the fiscal year ending September 30, 2013, $13,950 of the $100,000 debenture was converted into 2,052,795 shares of common stock. This conversion was converted within the terms of the agreement. On March 30, 2015, $4,000 of accrued interest was converted into 4,000,000 shares of common stock. As of March 31, 2015 $86,050 of the principal face value of the Debenture remains outstanding. In addition, as a consequence of the triggering of the default provision of the debenture the interest on the debenture has been instated at a rate of 18% effective as of the date of issuance, a $1,000 per business day penalty was being imposed for failure to execute a conversion in a timely manner, and an additional accrual of $112,509 was accounted for as a result of a provision requiring additional funds due in the event that a “default payment” is made by the Company.

 

NOTE 4: CONVERTIBLE NOTES PAYABLE

 

On January 29, 2014, the Company issued a Convertible Promissory Note to Asher Enterprises, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum, is unsecured and matured on October 31, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As a result of the conversion feature the Company has recorded a debt discount of $21,326, all of which has been amortized to interest expense. The discount was determined by calculating the intrinsic value of the loan based on the stock price on the date of the loan of $0.0065 and the conversion price of $0.0039. The intrinsic value was $21,326. As of September 30, 2014, $24,000 of principal was converted into 5,804,196 shares of common stock. On October 29, 2014, $5,915 of principal was converted into 4,550,000 shares of common stock and the remaining $9,374 of principal and interest was repaid. Due to the conversion within the terms of the agreement, no gain or loss was recognized.

 

 

On March 11, 2014, the Company issued a Convertible Promissory Note to Asher Enterprises, Inc. in the amount of $42,500. The note originally bears interest at a rate of 8% per annum but was increased to 22% on the maturity date. It is unsecured and matured on December 17, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As a result of the conversion feature the Company has recorded a debt discount of $42,500, all of which has been amortized to interest expense. The discount was determined by calculating the intrinsic value of the loan based on the stock price on the date of the loan of $0.0123 and the conversion price of $0.0030. The intrinsic value was $130,826; however the discount is limited to the amount of the loan. On November 11, 2014, $5,915 of principal was converted into 4,550,000 shares of common stock. On March 31, 2015, the fair value of the derivative was calculated using a multi-nominal lattice model. As of March 31, 2015, there is $36,585 of principal and $4,957 of accrued interest on this note. This note is currently past due.

 

On April 28, 2014, the Company issued a Convertible Promissory Note to KBM Worldwide, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum but was increased to 22% on the maturity date, is unsecured and matured on January 30, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As a result of the conversion feature the Company has recorded a debt discount of $37,500, all of which has been amortized to interest expense. The discount was determined by calculating the intrinsic value of the loan based on the stock price on the date of the loan of $0.015 and the conversion price of $0.00406. The intrinsic value was $101,047; however the discount is limited to the amount of the loan. On March 31, 2015, the fair value of the derivative was calculated using a multi-nominal lattice model. As of March 31, 2015, there is $3,493 of accrued interest on this note. This note is currently past due.

 

On June 25, 2014, the Company issued a Convertible Promissory Note to LG Capital Funding, LLC, in the amount of $47,500. The note bears interest at a rate of 8% per annum, is unsecured and matures on June 25, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount of the lowest trading price in the 20-day trading price prior to the conversion date. As a result of the conversion feature the Company has recorded a debt discount of $47,500, $36,699 of which has been amortized to interest expense. The discount was determined by calculating the intrinsic value of the loan based on the stock price on the date of the loan of $0.011 and the conversion price of $0.0035. The intrinsic value was $102,644; however the discount is limited to the amount of the loan. On March 31, 2015, the fair value of the derivative was calculated using a multi-nominal lattice model. As of March 31, 2015, there is $2,925 of accrued interest on this note.

 

On July 17, 2014, the Company issued a Convertible Promissory Note to KBM Worldwide, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum, is unsecured and matures on April 21, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As a result of the conversion feature the Company has recorded a debt discount of $37,500, $22,662 of which has been amortized to interest expense. The discount was determined by calculating the intrinsic value of the loan based on the stock price on the date of the loan of $0.0114 and the conversion price of $0.00518. The intrinsic value was $45,008; however the discount is limited to the amount of the loan. On March 31, 2015, the fair value of the derivative was calculated using a multi-nominal lattice model. As of March 31, 2015, there is $2,112 of accrued interest on this note.

 

A summary of the activity of the derivative liability is shown below:

 

Balance at September 30, 2014				$	183,648
Decrease in derivative due to extinguishment of debt					(7,560)
Decrease in derivative due to conversion of debt					(16,502)
Increase to derivative due to new issuances					135,533
Derivative gain due to mark to market adjustment					(112,745)
Balance at March 31, 2015				$	182,374

 

 

NOTE 5: COMMON STOCK TRANSACTIONS

 

On October 29, 2014, the Company issued 4,550,000 shares of common stock to Asher Enterprises, Inc. in conversion of $5,915 of principal due to them. Due to the conversion within the terms of the agreement, no gain or loss was recognized.

 

On November 11, 2014, the Company issued 4,550,000 shares of common stock to Asher Enterprises, Inc. for conversion of $5,915 of principal due to them. Due to the conversion within the terms of the agreement, no gain or loss was recognized.

 

On November 12, 2014, the Company issued 7,000,000 shares of common stock to a service provider in conversion of $35,000 of accounts payable for services rendered in a prior period. The shares were valued based on the closing price of the common stock on the date of grant.

 

On November 25, 2014, the Company sold 3,000,000 shares of common stock for total proceeds of $3,000.

 

Effective February 11, 2015, the Company restated its Articles of Incorporation in which it changed the par value of the Company’s common stock from $0.0001 to $0.00001 and increased the authorized shares of common stock to 2,000,000,000. The value of the common stock and additional paid in capital accounts have been retroactively adjusted for the change in par value.

 

On March 2, 2015, the Company issued 1,000,000 shares of common stock to Rachel Boulds, CFO for services. The shares were valued based on the closing price of the common stock on the date of grant for a total non-cash expense of $2,000.

 

On March 2, 2015, the Company issued 1,500,000,000 shares of common stock to Jeff Ritchie, Interim CEO for conversion of $15,000 of accrued salary. The shares were valued based on the closing price of the common stock on the date of grant which resulted in a loss on conversion of $2,985,000.

 

On March 2, 2015, the Company issued 62,500,000 shares of common stock to DTS Partners, LLC, for conversion of $2,500 of principal due to them. The shares were valued based on the closing price of the common stock on the date of grant which resulted in a loss on conversion of $122,500.

 

On March 30, 2015, the Company issued 4,000,000 shares of common stock to Neil Linder, for conversion of $4,000 of accrued interest due to him. Due to the conversion within the terms of the agreement, no gain or loss was recognized.

 

NOTE 6: PREFERRED STOCK

 

The Company is authorized to issue 15,000,010 preferred shares with a par value of $0.0001 per share.

 

On June 17, 2013, the Board of Directors designated a series of preferred stock titled Series A Preferred Stock consisting of 5,000,000 shares. There is currently no market for the shares of Series A Preferred Stock and they cannot be converted into shares of common stock of the Company. The Company received no cash proceeds from the issuance of the shares. The shares have super voting rights of 100 common shares for every one share of Series A. The Preferred Series A do not contain any rights to dividends; have no liquidation preference; are not to be amended without the holders approval. The company had a valuation completed and as a result expensed the value of the Preferred A during the quarter at a value of $79,000.

 

On December 1, 2014, the Company issued 5,000,000 shares of Series A Preferred stock to Jeff Ritchie, COO for services rendered.

 

NOTE 7: GOING CONCERN

The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has generated minimal revenue and has an accumulated deficit of $10,376,832 and has funded its operations primarily through the issuance short term debt and equity. This matter raises substantial doubt about the Company's ability to continue as a going concern.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Accordingly, the Company’s ability to accomplish its business strategy and to ultimately achieve profitable operations is dependent upon its ability to obtain additional debt or equity financing. Management plans to take the following steps that it believes will be sufficient to provide the Company with the ability to continue in existence.

 

 

Management intends to raise financing through private equity financing or other means and interests that it deems necessary. There can be no assurance that the Company will be successful in its endeavor.

 

NOTE 8: SUBSEQUENT EVENTS

 

The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements other then the following.

 

On April 17, 2015, the Company issued 3,060,000 shares of common stock to LG Capital Funding LLC, Inc. in conversion of $1,597 of principal and interest due to them.

 

On May 13, 2015, the Company issued 62,500,000 shares of common stock to DTS Partners, LLC, for conversion of $2,500 of principal due to them.

 

 

 

 

 

 

Item 2:  Management’s Discussion and Analysis or Plan of Operation

 

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this filing as well as with Management’s Discussion and Analysis or Plan of Operations contained in the Company’s Report on Form 10-K, for the year ended September 30, 2014, filed with the Securities and Exchange Commission.  

 

Forward Looking Statements

 

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-K involve risks and uncertainties, including statements as to:

 

        ·  our future operating results;

        ·  our business prospects;

        ·  our contractual arrangements and relationships with third parties;

        ·  the dependence of our future success on the general economy;

        ·  our possible future financings; and

        ·  the adequacy of our cash resources and working capital.

 

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

 

Plan of Operations

 

The company’s plan of operations seeks to acquire real estate assets primarily, but not exclusively, in the hospitality space, which present value creation potential due to the complexity or illiquidity of their existing ownership and / or capital structure. In such situations, IFLM will seek to actively work through the complexities, gain control of the asset, actively manage, recapitalize and thereby create value. For those assets lying outside of the hospitality space, IFLM will sell the assets at a price which realizes that value created. For those assets lying within the hospitality space, IFLM will then leverage its film, entertainment and hospitality capabilities to transform the property into genre themed hotels and resorts. The final product will be a paradigm-shifting convergence of hospitality and entertainment, providing guests with a full immersion experience during their stay. Additionally, should any opportunities for content creation/distribution projects present themselves, IFLM will pursue those that align with the company’s strategic vision.

 

On February 6, 2014, the Company created two new subsidiaries, the IFLM LA Realty Fund, LLC and the Hilltop Manor Fund, LLC. The Companies will be used to hold two separate offerings for real estate investment funds.  The net cash proceeds from these two offerings, less working capital expenses, will be used to invest in real estate and/or the costs associated with the acquisition and development of real estate.  The real estate investments under the IFLM LA Realty Fund will focus on undervalued properties on the West Coast of the United States.  The Hilltop Manor Fund will focus on the initial costs associated with the acquisition and development of the Hilltop Manor theme park and resort concept.

 

Real Estate Development

 

IFLM seeks to identify and develop to the full potential and highest and best use, properties for genre themed hotels and resorts. IFLM's target market for this real estate division is hotel resorts located within the U.S. IFLM will leverage its considerable talent and experience in real estate development and operations, and combine it with its film and entertainment expertise to create themed hotels that are at the forefront of the convergence of entertainment and hospitality.

 

In addition, IFLM will identify and acquire other undervalued or distressed properties in highly attractive locations in the United States that may lie outside of the hospitality industry. These commercial and residential properties will be renovated or otherwise developed to maximize their potential returns for IFLM and its stakeholders on a short term and medium term basis.

 

Film and Video Library

 

IFLM possesses a small video and film library.

 

Employees

 

As of March 31, 2015, we employed a total of three management level personnel.  We may require additional employees in the future. There is intense competition for capable, experienced personnel and there is no assurance the Company will be able to obtain new qualified employees when required.   

 

The Company believes its relations with its employees are good.

 

Results of Operations – Three Months Ended March 31, 2015 as Compared to the Three Months Ended March 31, 2014

 

Operating Expenses

 

Professional fees for the three months ended March 31, 2015 were $18,561, as compared to $17,378 for the three months ended March 31, 2014, an increase of $1,183 or 6.8%.  Professional fees mainly consist of legal, auditor and other fees associated with the Company’s quarterly filings and year end audit.

 

Officer compensation expense for the three months ended March 31, 2015 decreased $82,849 or 58.3% to $59,226, as compared to $142,075 for the three months ended March 31, 2014.  The expense consists of cash payments, accrued salary and stock. In the prior period we had additional compensation expense for an officer that is no longer with the Company as well as non-cash expense of $49,300 for the issuance of common stock for services.

 

General and administrative expense decreased $15,861 or 75.8% to $5,054 for the three months ended March 31, 2015 from $20,915 for the three months ended March 31, 2014. The decrease in the current period can be attributed to a decrease in rent and other office expense.

 

Other Expenses

 

Total other expense increased from a gain of $1,486,019 for the three months ended March 31, 2014 to a loss of $3,122,767 for the three months ended March 31, 2015. In the prior year we recognized a $1,360,227 gain on the extinguishment of debt, while in the current period we recognized a $3,107,500 loss on the settlement of debt.

Net Income (Loss)

We recorded a net loss of $3,205,608 for the three months ended March 31, 2015, as compared to a net gain of $1,305,648 for the three months ended March 31, 2014.  As discussed above the large swing from a net gain to a net loss is attributed to the extinguishment of debt.

Results of Operations – Six Months Ended March 31, 2015 as Compared to the Six Months Ended March 31, 2014

 

Operating Expenses

 

Professional fees for the six months ended March 31, 2015 were $23,836, as compared to $23,803 for the six months ended March 31, 2014, an increase of $33.  Professional fees mainly consist of legal, auditor and other fees associated with the Company’s quarterly filings and year end audit.

 

Officer compensation expense for the six months ended March 31, 2015 decreased $33,651 or 17% to $231,001, as compared to $197,350 for the six months ended March 31, 2014.  The expense consists of cash payments, accrued salary and stock. In the prior period we had additional compensation expense for an officer that is no longer with the Company as well as non-cash expense of $49,300 for the issuance of common stock for services.

 

General and administrative expense decreased $174,086 or 92% to $14,820 for the six months ended March 31, 2015 from $188,906 for the six months ended March 31, 2014. In the prior year we issued $165,500 of common stock for services.

 

Other Expenses

 

Total other expense increased from a gain of $957,366 for the six months ended March 31, 2015 to a loss of $3,258,398 for the six months ended March 31, 2015. In the prior year we recognized a $1,360,227 gain on the extinguishment of debt, while in the current period we recognized a $3,107,500 loss on the settlement of debt.

 

Net Income (Loss)

We recorded a net loss of $3,528,055 for the six months ended March 31, 2015, as compared to a net gain of $957,366 for the six months ended March 31, 2014.  As discussed above the large swing from a net gain to a net loss is attributed to the extinguishment of debt.

Liquidity and Capital Resources

At March 31, 2015, we had an accumulated deficit of $10,376,832 and a working capital deficit of $1,630,923. For the six months ended March 31, 2015, net cash used in operating activities was $87,836.

 

On March 11, 2014, the Company issued a Convertible Promissory Note to Asher Enterprises, Inc. in the amount of $42,500. The note bears interest at a rate of 8% per annum, is unsecured and matured on December 17, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date On November 11, 2014, $5,915 of principal was converted into 4,550,000 shares of common stock. As of March 31, 2015, there is $36,585 of principal and $4,957 of accrued interest on this note. This note is currently past due.

 

On April 28, 2014, the Company issued a Convertible Promissory Note to KBM Worldwide, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum, is unsecured and matured on January 30, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As of March 31, 2015, there is $3,493 of accrued interest on this note. This note is currently past due.

 

On June 25, 2014, the Company issued a Convertible Promissory Note to LG Capital Funding, LLC, in the amount of $47,500. The note bears interest at a rate of 8% per annum, is unsecured and matures on June 25, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount of the lowest trading price in the 20-day trading price prior to the conversion date. As of March 31, 2015, there is $2,925 of accrued interest on this note.

 

On July 17, 2014, the Company issued a Convertible Promissory Note to KBM Worldwide, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum, is unsecured and matures on April 21, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As of March 31, 2015, there is $2,112 of accrued interest on this note.

 

Critical Accounting Estimates and Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 1 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

 

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

 

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.  The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.  Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

 

 

Off-Balance Sheet Arrangements 

 

We have not entered into 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 and would be considered material to investors.

 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable to smaller reporting companies.

 

 

Item 4: Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were effective for the quarterly period ended March 31, 2015.

 

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

 

Changes in Internal Controls

 

Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the six-month period ended March 31, 2015.  Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

Item 1A Risk Factors

 

We are subject to various risks which may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.

 

We are a relatively young company with a limited operating history

 

Since we are a young company, it is difficult to evaluate our business and prospects. At this stage of our business operations, even with our good faith efforts, potential investors have a high probability of losing their investment. Our future operating results will depend on many factors, including the ability to generate sustained and increased demand and acceptance of our products, the level of our competition, and our ability to attract and maintain key management and employees. While management believes their estimates of projected occurrences and events are within the timetable of their business plan, there can be no guarantees or assurances that the results anticipated will occur.

 

 

We expect to incur net losses in future quarters.

 

If we do not achieve profitability, our business may not grow or operate. We may not achieve sufficient revenues or profitability in any future period. We will need to generate revenues from the sales of our products or take steps to reduce operating costs to achieve and maintain profitability. Even if we are able to generate revenues, we may experience price competition that will lower our gross margins and our profitability. If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis.

 

We will require additional funds to operate in accordance with our business plan.

 

We may not be able to obtain additional funds that we may require. We do not presently have adequate cash from operations or financing activities to meet our short or long-term needs.  If unanticipated expenses, problems, and unforeseen business difficulties occur, which result in material delays, we will not be able to operate within our budget. If we do not achieve our internally projected sales revenues and earnings, we will not be able to operate within our budget. If we do not operate within our budget, we will require additional funds to continue our business. If we are unsuccessful in obtaining those funds, we cannot assure you of our ability to generate positive returns to the Company. Further, we may not be able to obtain the additional funds that we require on terms acceptable to us, if at all. We do not currently have any established third-party bank credit arrangements. If the additional funds that we may require are not available to us, we may be required to curtail significantly or to eliminate some or all of our development, manufacturing, or sales and marketing programs.

 

We may seek to obtain them primarily through equity or debt financings. Such additional financing, if available on terms and schedules acceptable to us, if available at all, could result in dilution to our current stockholders and to you. We may also attempt to obtain funds through arrangement with corporate partners or others. Those types of arrangements may require us to relinquish certain rights to our intellectual property or resulting products.

 

We are highly dependent on our Interim CEO and COO Jeff Ritchie. The loss of either, whose knowledge, leadership, and technical expertise upon which we rely, would harm our ability to execute our business plan

 

We are largely dependent on our CEO and COO, for their knowledge and experience. Our ability to successfully market and distribute our products may be at risk from an unanticipated accident, injury, illness, incapacitation, or death of either. Upon such occurrence, unforeseen expenses, delays, losses and/or difficulties may be encountered.  Our success may also depend on our ability to attract and retain other qualified management and sales and marketing personnel.

 

We compete for such persons with other companies and other organizations, some of which have substantially greater capital resources than we do. We cannot give you any assurance that we will be successful in recruiting or retaining personnel of the requisite caliber or in adequate numbers to enable us to conduct our business.

 

If  capital  is  not  available  to  us to expand our business operations,  we  will  not  be able to pursue our business plan.

 

We will require substantial additional capital to acquire additional properties and to participate in the development of those properties.  Cash flows from operations, to the extent available, will be used to fund these expenditures.  We intend to seek additional capital from loans from current shareholders and from public and private equity offerings.  Our  ability  to  access capital  will  depend  on  its  success  in participating  in  properties that are successful in exploring for and producing oil  and gas at profitable prices.  It will also be dependent upon the status of the capital markets at the time such capital is sought. Should sufficient capital not be available, the development of our business plan could be delayed and, accordingly, the implementation of the USD Energy's business strategy would be adversely affected. In such event it would not be likely that investors would obtain a profitable return on their investments or a return of their investments.

 

Nevada Law and Our Charter May Inhibit a Takeover of Our Company That Stockholders May Consider Favorable

 

Provisions of Nevada law, such as its business combination statute, may have the effect of delaying, deferring or preventing a change in control of our company. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.

 

Our Officers and Directors Have the Ability to Exercise Significant Influence Over Matters Submitted for Stockholder Approval and Their Interests May Differ From Other Stockholders

 

Our executive officers and directors, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including mergers, acquisitions, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of these executive officers and directors may differ from the interests of the other stockholders.

 

 

 

 The Market for Our Common Stock Is Illiquid

 

The market for our common stock is volatile and illiquid.   As a result, this could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.

 

The Penny Stock Rules  cover our stock, which may make it difficult for a broker to sell investors shares.  This may make our stock less marketable, and liquid, and result in a lower market price.

 

Our common stock is a penny stock, which means that SEC rules require broker dealers who make transactions in the stock to comply with additional suitability assessments and disclosures than they would in stock that were not penny stocks, as follows:

 

Prior to the transaction, to approve the person's account for transactions in penny stocks by obtaining information from the person regarding his or her financial situation, investment experience and objectives, to reasonably determine based on that information that transactions in penny stocks are suitable for the person, and that the person has sufficient knowledge and experience in financial matters that the person or his or her independent advisor reasonably may be expected to be capable of evaluating the risks of transactions in penny stocks. In addition, the broker or dealer must deliver to the person a written statement setting forth the basis for the determination and advising in highlighted format that it is unlawful for the broker or dealer to effect a transaction in a penny stock unless the broker or dealer has received, prior to the transaction, a written agreement from the person. Further, the broker or dealer must receive a manually signed and dated written agreement from the person in order to effectuate any transactions is a penny stock.

 

• Prior to the transaction, the broker or dealer must disclose to the customer the inside bid quotation for the penny stock and, if there is no inside bid quotation or inside offer quotation, he or she must disclose the offer price for the security transacted for a customer on a principal basis unless exempt from doing so under the rules.

 

• Prior to the transaction, the broker or dealer must disclose the aggregate amount of compensation received or to be received by the broker or dealer in connection with the transaction, and the aggregate amount of cash compensation received or to be received by any associated person of the broker dealer, other than a person whose function in solely clerical or ministerial.

 

• The broker or dealer, who has affected sales of penny stock to a customer, unless exempted by the rules, is required to send to the customer a written statement containing the identity and number of shares or units of each such security and the estimated market value of the security. Imposing these reporting and disclosure requirements on a broker or dealer make it unlawful for the broker or dealer to effect transactions in penny stocks on behalf of customers. Brokers or dealers may be discouraged from dealing in penny stocks, due to the additional time, responsibility involved, and, as a result, this may have a deleterious effect on the market for the Company’s stock.

 

Item 2. Unregistered Sales and Issuances of Equity Securities and Use of Proceeds

 

On October 29, 2014, the Company issued 4,550,000 shares of common stock to Asher Enterprises, Inc. in conversion of $5,915 of principal due to them.

 

On November 11, 2014, the Company issued 4,550,000 shares of common stock to Asher Enterprises, Inc. for conversion of $5,915 of principal due to them.

 

On November 12, 2014, the Company issued 7,000,000 shares of common stock to Kenneth Eade in conversion of $35,000 of accounts payable for services rendered in a prior period.

 

On November 25, 2014, the Company sold 3,000,000 shares of common stock to Jerry Shipman for total proceeds of $3,000. The proceeds were used to pay for professional fees related to the Company’s year-end audit.

 

On March 2, 2015, the Company issued 1,000,000 shares of common stock to Rachel Boulds, CFO for services. The shares were valued based on the closing price of the common stock on the date of grant for a total non-cash expense of $2,000.

 

On March 2, 2015, the Company issued 1,500,000,000 shares of common stock to Jeff Ritchie, Interim CEO for conversion of $15,000 of accrued salary. The shares were valued based on the closing price of the common stock on the date of grant which resulted in a loss on conversion of $2,985,000.

 

On March 2, 2015, the Company issued 62,500,000 shares of common stock to DTS Partners, LLC, for conversion of $2,500 of principal due to them. The shares were valued based on the closing price of the common stock on the date of grant which resulted in a loss on conversion of $122,500.

 

On March 30, 2015, the Company issued 4,000,000 shares of common stock to Neil Linder, for conversion of $4,000 of accrued interest due to him. Due to the conversion within the terms of the agreement, no gain or loss was recognized.

 

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

Incorporated by reference

Exhibit

Exhibit Description

Filed herewith

Form

Period ending

Exhibit

Filing date

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Definition

X

 

*  Pursuant to Rule 406T of Regulation S-T, these interactive files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 20, 2015		INDEPENDENT FILM DEVELOPMENT CORPORATION   BY:      Jeff Ritchie     /s/ Jeff Ritchie                                          Interim Chief Executive Officer   By:        Rachel Boulds   /s/Rachel Boulds                                      Chief Financial Officer

 

 

 

 

Exhibit 31.1

 

 

Section 302 Certifications

 

 

I, Jeff Ritchie, hereby certify that:

 

(1) I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2015 (the “report”) of Independent Development Film Corporation;

 

(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 officers 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 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 officers 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 registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies in the design or operation of internal control 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 control over financial reporting.

 

Dated: May 20, 2015	/s/ Jeff Ritchie Jeff Ritchie Interim Chief Executive Officer

 

 

Exhibit 31.2

 

 

Section 302 Certifications

 

 

I, Rachel Boulds, hereby certify that:

 

(1) I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2015 (the “report”) of Independent Development Film Corporation;

 

(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 officers 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 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 officers 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 registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies in the design or operation of internal control 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 control over financial reporting.

 

Dated: May 20, 2015	/s/ Rachel Boulds Rachel Boulds Chief Financial Officer and Director

 

 

 

Exhibit 32.1

 

 

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officers of Independent Development Film Corporation. a Nevada corporation (the "Company"), does hereby certify, to the best of his knowledge, that:

 

1.     The Quarterly Report on Form 10-Q for the period ending March 31, 2015 (the "Report") of the Company complies in all material respects with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.  

 

Date: May 20, 2015		INDEPENDENT FILM DEVELOPMENT CORPORATION   BY:      Jeff Ritchie   /s/ Jeff Ritchie Interim Chief Executive Officer   By:        Rachel Boulds   /s/Rachel Boulds             Chief Financial Officer and Director