Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Aug. 31, 2015 | Oct. 20, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Berkshire Homes, Inc. | |
Entity Central Index Key | 1,505,124 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,575,002 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Aug. 31, 2015 | Nov. 30, 2014 |
Properties | ||
Properties under development | $ 3,233,999 | $ 4,963,545 |
Properties held for sale | 2,409,708 | 932,171 |
Properties, net | 5,643,707 | 5,895,716 |
Cash and equivalents | 477,776 | 353,685 |
Prepaid expenses | 25,206 | 5,000 |
Assets related to discontinued operations, net of accumulated depreciation of $ 59,907 (2014-$24,923) | $ 2,776,361 | 2,634,247 |
Vehicle, net of accumulated depreciation of $ nil (2014-$ 1,229) | $ 28,271 | |
Advances due from Praetorian Property, Inc. | $ 3,877 | |
Deferred financing costs | 38,977 | $ 5,322 |
Total Assets | 8,965,904 | 8,922,241 |
LIABILITIES AND STOCKHOLDERS DEFICIT | ||
Accounts payable and accrued liabilities | 6,903 | 26,529 |
Accrued interest | 722,556 | 373,544 |
Accounts payable to related parties | $ 482,243 | 494,020 |
Advances due to Praetorian Property, Inc. | $ 149,472 | |
Loan payable | $ 212,110 | |
Promissory notes | 9,150,000 | $ 9,150,000 |
Total liabilities | 10,573,812 | 10,193,565 |
Stockholders Deficit | ||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; 2,000,000 and nil shares issued and outstanding | 200 | 200 |
Common Stock, $0.0001 par value, 500,000,000 shares authorized, 1,572,002 and 1,572,002 shares issued and outstanding | 157 | 157 |
Additional paid-in capital | 168,243 | 168,243 |
Preferred share subscription receivable | (20,000) | (20,000) |
Accumulated Deficit | (1,756,508) | (1,419,924) |
Total Stockholders Deficit | (1,607,908) | (1,271,324) |
TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT | $ 8,965,904 | $ 8,922,241 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Aug. 31, 2015 | Nov. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Discontinued Operations, accumulated depreciation | $ 59,907 | $ 24,923 |
Vehicle accumulated depreciation | $ 1,229 | |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized shares | 20,000,000 | 20,000,000 |
Preferred stock, issued shares | 2,000,000 | 2,000,000 |
Preferred stock, outstanding shares | 2,000,000 | 2,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares | 500,000,000 | 500,000,000 |
Common stock, issued shares | 1,572,002 | 1,572,002 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2015 | Aug. 31, 2014 | Aug. 31, 2015 | Aug. 31, 2014 | |
REVENUES | ||||
Property sales | $ 230,002 | $ 3,411,705 | $ 1,655,418 | $ 4,621,705 |
COST OF SALES | ||||
Property costs | 180,978 | 2,997,901 | 1,492,474 | 4,106,511 |
GROSS PROFIT | $ 49,024 | $ 413,804 | 162,944 | $ 515,194 |
EXPENSES | ||||
Depreciation | 4,917 | |||
Consulting fees | 5,000 | $ 12,000 | ||
Insurance | $ 3,221 | $ 832 | 10,693 | 6,897 |
General and administrative | 8,843 | 22,988 | 31,956 | 49,319 |
Professional fees | 11,539 | 731 | 60,368 | 45,696 |
Management fees and expenses | 26,692 | 31,624 | 100,534 | 85,995 |
TOTAL EXPENSES | 50,295 | 56,175 | 213,468 | 199,907 |
INCOME (LOSS) FROM OPERATIONS | (1,271) | $ 357,629 | (50,524) | $ 315,287 |
OTHER INCOME (EXPENSE) | ||||
Gain on sale of vehicle | 3,346 | 3,346 | ||
Interest expense | (126,086) | $ (102,595) | (359,122) | $ (198,416) |
TOTAL OTHER INCOME (EXPENSE) | (122,740) | (102,595) | (355,776) | (198,416) |
INCOME (LOSS) FROM CONTINUING OPERATIONS | (124,011) | 255,034 | (406,300) | 116,871 |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | (15,880) | 69,716 | ||
NET INCOME (LOSS) | $ (139,891) | $ 255,034 | $ (336,584) | $ 116,871 |
NET INCOME (LOSS) PER SHARE: BASIC AND DILUTED CONTINUING OPERATIONS | $ (0.08) | $ 0.16 | $ (0.26) | $ 0.07 |
NET INCOME PER SHARE: BASIC AND DILUTED DISCONTINUED OPERATIONS | $ (0.01) | $ 0 | $ (0.04) | $ 0 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | 1,572,002 | 1,572,002 | 1,572,002 | 1,700,889 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) for the period | $ (336,584) | $ 116,871 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on sale of vehicle | (3,346) | |
Depreciation | 39,901 | |
Amortization of deferred financing costs | 8,595 | $ 7,369 |
Changes in operating assets and liabilities: | ||
Prepaid expenses | (20,206) | |
Inventory of properties under development | 252,009 | $ (6,689,398) |
Accounts payable | (19,626) | $ (11,655) |
Accounts payable related party | (11,777) | |
Accrued interest | 349,012 | $ 198,416 |
Net Cash Provided/(Used) by Operating Activities | 257,978 | $ (6,378,397) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds on sale of vehicle | 26,700 | |
Rental properties, rehabilitation expense | (177,098) | |
Net Cash Used by Investing Activities | (150,398) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from loan payable | $ 169,860 | |
Issuance of promissory notes | $ 6,500,000 | |
Repayment of advances from Praetorian Property, Inc. | $ (153,349) | 117,951 |
Net Cash Provided by Financing Activities | 16,511 | 6,617,951 |
Net Change in Cash | 124,091 | 239,554 |
Cash and Cash equivalents, beginning of period | 353,685 | 146,048 |
Cash and Cash equivalents, end of period | $ 477,776 | $ 385,602 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Interest paid | ||
Income taxes paid | ||
NON CASH TRANSACTIONS | ||
Preferred stock subscription | $ 20,000 | |
Cancellation of common stock | $ 5,800 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Aug. 31, 2015 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | Berkshire Homes, Inc. (the Company) was incorporated in Nevada on June 2, 2010. The Company operated an agricultural consulting business until November 16, 2012 when upon change of management the Company changed its business focus to acquisition, rehabilitation and sale or lease of distressed residential real estate in the United States. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Aug. 31, 2015 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation |
RELATED PARTY TRANSATIONS
RELATED PARTY TRANSATIONS | 9 Months Ended |
Aug. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSATIONS | During the three months ended August 31, 2015 and 2014, the Company incurred management fees and expenses of $26,692 and $31,624 to its officers, respectively. During the nine months ended August 31, 2015 and 2014, the Company incurred management fees and expenses of $100,534 and $85,995 to its officers, respectively. As of August 31, 2015 and December 31, 2014, the Company had a payable of $482,243 owed to Bay Capital A.G., who became a related party during 2013 by obtaining majority ownership. As of August 31, 2015 and December 31, 2014, there were $0 and $11,0777 owed to the Chief Executive Officer of the Company, respectively. During 2013, Praetorian Property, Inc., an entity with common ownership and management, advanced an aggregate of $50,496 to us which was outstanding as of November 30, 2013. In addition, in 2014, Cannabis advanced an additional $99,093 to us, $117 of which was written off as of the year ended November 30, 2014. During the period ended August 31, 2015, the Company repaid $ 153,349 of the advances. As at August 31, 2015, the total advances to Cannabis was $3,877. The amounts due to these related parties are due on demand, non-interest bearing and unsecured. |
PROMISSORY NOTES
PROMISSORY NOTES | 9 Months Ended |
Aug. 31, 2015 | |
Debt Disclosure [Abstract] | |
PROMISSORY NOTES | On June 13, 2013, the Company borrowed $2,150,000 at an interest rate of 5% per annum. The promissory note is unsecured and is due on June 13, 2015. In connection with the note, the Company paid a fee of $19,650 to a third party which was recorded as deferred financing costs and is being amortized to interest expense over the life of the loan using the effective interest rate method. During the period ended August 31, 2015, amortization expense of $5,322 was recognized and no unamortized financing costs as of August 31, 2015. The note has matured. While the note has matured, the note has not been declared in default. Accordingly, the Company will continue accruing interest at 5% per annum and not the default interest rate of 12% per annum. On June 27, 2013, the Company borrowed $500,000 at an interest rate of 5% per annum. The promissory note is unsecured and is due on June 27, 2015. The note has matured. While the note has matured, the note has not been declared in default. Accordingly, the Company will continue accruing interest at 5% per annum and not the default interest rate of 12% per annum On April 21, 2014, the Company borrowed $4,500,000 at an interest rate of 5% per annum. The promissory note is unsecured and is due on April 21, 2016. On June 23, 2014, the Company borrowed $2,000,000 at an interest rate of 5% per annum. The promissory note is unsecured and is due on June 23, 2016. |
LOAN PAYABLE
LOAN PAYABLE | 9 Months Ended |
Aug. 31, 2015 | |
Loan Payable | |
LOAN PAYABLE | On July 6, 2015, the Company entered into a term note agreement in the total amount of $1,500,000. The loan payable is repayable in monthly interest payments of interest only, calculated at the greater of 8.25% or 475 basis points above the Wall Street Journals Prime Lending Rate. Balance of principal and any unpaid interest is due July 1, 2017. The Company received an initial advance of $212,110. Financing fees of $42,520 have been deferred on the balance sheet and are being amortized over a 24 month period. The loan is secured by the Companys Tallahassee property. The proceeds of the loan is only for the payment of costs directly associated with the construction of the improvements and shall not divert such funds for any other purpose. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Aug. 31, 2015 | |
Equity [Abstract] | |
COMMON STOCK | On February 12, 2014, the Company authorized a class of Series A preferred stock consisting of 5,000,000 shares with a par value of $ 0.0001 per share. On February 12, 2014, the Company agreed to issue 2,000,000 such shares for cash of $20,000. As of August 31, 2015, the Company had not received the proceeds of the share subscription and the proceeds have been recorded as share subscriptions receivable. |
ACQUISITION
ACQUISITION | 9 Months Ended |
Aug. 31, 2015 | |
Business Combinations [Abstract] | |
ACQUISITION | On June 27, 2014, the Company acquired a 100% ownership interest in a property located in Tallahassee, Florida at an auction for a purchase price of $2,500,000 and rehabilitation expenses of $159,170 for a total of $2,659,170. During the period ended August 31, 2015, the Company incurred rehabilitation expenses of $16,411 related to the property and during this period inventory of properties under development increased by $225,557. The property consisted of 56 residential units consisting of one and two bedrooms. There were preexisting leases. However, due to the short-term nature of the leases, no value was assigned to them. The property was purchased for the purpose of resale after renovations. Offers for the purchase of the property have been received. On February 2, 2015, a written offer for $3,500,000 has been executed. The following table summarizes the preliminary estimated fair values of the assets and liabilities acquired as part of the Tallahasee purchase: Land $ 556,000 Buildings, net and Improvements 2,078,247 Estimated fair value of assets and liabilities acquired $ 2,634,247 The rental income and expenses from the discontinued operations for the three and nine months ended August 31, 2015 is as follows: 3 months 9 months Rental Income $ 11,399 60,637 Purchase deposit forfeited 75,000 Rental Expense (15,618 ) (30,938 ) Depreciation Expense (11,661 ) (34,983 ) Total rental income and expense (15,880) 69,716 The property has been classified as held for sale. As a result the assets and rental income have been presented as discontinued operations in the financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Aug. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company has come to an agreement to convert $20,000 in accounts payable as payment for the subscription receivable for the 2,000,000 shares of Series A Preferred Stock. |
SIGNIFICANT ACCOUNTING POLICI14
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Aug. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation |
ACQUISITION (Tables)
ACQUISITION (Tables) | 9 Months Ended |
Aug. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of Estimated Fair Values of the Assets and Liabilities Acquired | Land $ 556,000 Buildings, net and Improvements 2,078,247 Estimated fair value of assets and liabilities acquired $ 2,634,247 |
Schedule of Rental Income and Expenses | 3 months 9 months Rental Income $ 11,399 60,637 Purchase deposit forfeited 75,000 Rental Expense (15,618 ) (30,938 ) Depreciation Expense (11,661 ) (34,983 ) Total rental income and expense (15,880) 69,716 |
DESCRIPTION OF BUSINESS AND B16
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) | 9 Months Ended |
Aug. 31, 2015 | |
Accounting Policies [Abstract] | |
Date of Incorporation | Jun. 2, 2010 |
RELATED PARTY TRANSATIONS (Deta
RELATED PARTY TRANSATIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Aug. 31, 2015 | Aug. 31, 2014 | Aug. 31, 2015 | Aug. 31, 2014 | Dec. 31, 2014 | Nov. 30, 2014 | Nov. 29, 2014 | Nov. 30, 2013 | |
Management fees and expenses | $ 26,692 | $ 31,624 | $ 100,534 | $ 85,995 | ||||
Accounts payable to related parties | 482,243 | 482,243 | $ 494,020 | |||||
Advances due to Praetorian Property, Inc. | 3,877 | 3,877 | $ 99,093 | $ 50,496 | ||||
Advances written off | $ 117 | |||||||
Repayment of advances from Praetorian Property, Inc. | 153,349 | $ (117,951) | ||||||
Bay Capital AG | ||||||||
Accounts payable to related parties | 482,243 | 482,243 | $ 482,243 | |||||
Chief Executive Officer | ||||||||
Accounts payable to related parties | $ 0 | $ 0 | $ 11,777 |
PROMISSORY NOTES (Details Narra
PROMISSORY NOTES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Aug. 31, 2015 | Aug. 31, 2014 | Aug. 31, 2015 | Aug. 31, 2014 | Nov. 30, 2014 | |
Issuance of promissory notes | $ 169,860 | ||||
Interest expense | $ 126,086 | $ 102,595 | 359,122 | $ 198,416 | |
Amortization expense | 8,595 | 7,369 | |||
Long term liability | 9,150,000 | 9,150,000 | $ 9,150,000 | ||
Interest Expense | $ (122,740) | $ (102,595) | $ (355,776) | $ (198,416) | |
Promissory Note 1 | |||||
Date of Debt Instrument | Jun. 13, 2013 | ||||
Issuance of promissory notes | $ 2,150,000 | ||||
Interest expense | $ 19,650 | ||||
Interest rate | 5.00% | ||||
Amortization expense | $ 5,322 | ||||
Debt Instrument, Due Date | Jun. 13, 2015 | ||||
Promissory Note 2 | |||||
Date of Debt Instrument | Jun. 27, 2013 | ||||
Issuance of promissory notes | $ 500,000 | ||||
Interest rate | 5.00% | ||||
Debt Instrument, Due Date | Jun. 27, 2015 | ||||
Promissory Note 3 | |||||
Date of Debt Instrument | Apr. 21, 2014 | ||||
Issuance of promissory notes | $ 4,500,000 | ||||
Interest rate | 5.00% | ||||
Debt Instrument, Due Date | Apr. 21, 2016 | ||||
Promissory Note 4 | |||||
Date of Debt Instrument | Jun. 23, 2014 | ||||
Issuance of promissory notes | $ 2,000,000 | ||||
Interest rate | 5.00% | ||||
Debt Instrument, Due Date | Jun. 23, 2016 |
LOAN PAYABLE (Details Narrative
LOAN PAYABLE (Details Narrative) - USD ($) | 9 Months Ended | |
Aug. 31, 2015 | Nov. 30, 2014 | |
Loan payable | $ 212,110 | |
Note Agmt #1 | ||
Date of Debt Instrument | Jul. 6, 2015 | |
Debt Instrument | $ 1,500,000 | |
Debt Instrument, Variable Interest Description | The loan payable is repayable in monthly interest payments of interest only, calculated at the greater of 8.25% or 475 basis points above the Wall Street Journals Prime Lending Rate. | |
Debt Instrument, Due Date | Jul. 1, 2017 | |
Loan payable | $ 212,110 | |
Financing fees | $ 42,520 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - USD ($) | Aug. 31, 2015 | Nov. 30, 2014 | Feb. 12, 2014 |
Equity [Abstract] | |||
Common Stock, authorized | 500,000,000 | 500,000,000 | |
Common Stock, par value | $ 0.0001 | $ 0.0001 | |
Preferred Stock, authorized | 20,000,000 | 20,000,000 | |
Preferred Stock, par value | $ 5,000,000 | ||
Series A Preferred stock, par value | $ 5,000,000 | ||
Series A Preferred stock, authorized shares | 0.0001 | ||
Series A Preferred stock, issued shares | 2,000,000 | ||
Series A Preferred stock, amount | $ 20,000 |
ACQUISITION - Schedule of Estim
ACQUISITION - Schedule of Estimated Fair Values of the Assets and Liabilities Acquired (Details) | Aug. 31, 2015USD ($) |
Business Combinations [Abstract] | |
Land | $ 556,000 |
Buildings, net and Improvements | 2,078,247 |
Estimated fair value of assets and liabilities acquired | $ 2,634,247 |
ACQUISITION - Schedule of Renta
ACQUISITION - Schedule of Rental Income and Expenses (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Aug. 31, 2015 | Aug. 31, 2015 | |
Acquisition - Schedule Of Rental Income And Expenses Details | ||
Rental Income | $ 11,399 | $ 60,637 |
Purchase deposit foreited | 75,000 | |
Rental Expense | $ (15,618) | (30,938) |
Depreciation Expense | (11,661) | (34,983) |
Total rental income and expense | $ (15,880) | $ 69,716 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | 9 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Property Rehabilitation Expense | $ (177,098) | |
Inventory of properties under development | $ 252,009 | $ (6,689,398) |
Tallahasee Purchase | ||
Date of Agreement | Jun. 27, 2014 | |
Property Purchase Price | $ 2,500,000 | |
Property Rehabilitation Expense | 159,173 | |
Rehabilitation expense | 16,411 | |
Total purchase price | $ 2,659,170 |