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INTELLIGENT BUYING, INC. - 10-K - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION(Edgar Glimpses Via Acquire Media NewsEdge) Overview The Company has been engaged since 2004 in the business of asset management and sales of high-end computerized networking equipment to emerging high technology companies. Commencing in 2011, the Company began providing advertising services to promote products and services of third parties (primarily a related company, Anchorfree Wireless, Inc.) to the Company's customer base. Under this business model, third parties pay the Company a fee to disseminate their advertising to the Company's customer base. This has now become the principal service product provided by the Company. While the Company has not abandoned its previous business plan, it is not being actively pursued at this time. Plan of Operations a. General The extent of our operations over the next twelve (12) months will be determined by our ability to generate advertising business and, to the extent possible, access and purchase new inventory which can be resold to third parties consistent with our historic business plan. Our business may require a continuing access to additional capital, and there is no guarantee that we will be able to access such capital on terms acceptable to the Company, if at all. While we cannot predict exactly what our level of activity will be over the next 12 months, past experience leads us to believe that available capital resources will not be adequate to fund working capital requirements for the 12-month period which commenced January 1, 2014. 5 We will attempt to not incur any cash obligations that we cannot satisfy with known resources, which are currently very limited. The Company does not believe that period-to-period comparisons of its operating results are necessarily meaningful nor should they be relied upon as reliable indicators of future performance, thus making it difficult to accurately forecast quarterly and annual revenues and results of operations. In addition, our operating results are likely to fluctuate significantly from quarter to quarter, and year-to-year, as a result of several factors, many of which are outside our control, and any of which could materially harm our business. Our revenues for the foreseeable future will remain primarily dependent on our ability to generate additional advertising revenues and/or acquire inventory on a continuing basis. As aforesaid, future revenues are difficult to forecast. The Company may be unable to adjust spending quickly enough to offset any unexpected increase in demand or a reduction in revenues in a particular quarter or year, which may materially adversely affect our business, financial condition and results of operations. b. Current and Anticipated Expenses The Company is a publicly-reporting and, as a consequence thereof, has incurred and will continue to incur additional significant expenses for legal, accounting and related services. In order to fulfill its reporting requirements under the Securities Exchange Act of 1934, there will be ongoing expenses associated with the ongoing professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements as well as ongoing costs of operations. Current monthly expenses to run the Company average approximately $5,000. Payment of future monthly expenses will be largely dependent on available cash. d. Officers' Compensation and Loans Neither Mr. Malobrodsky nor Mr. Gorodyansky has received or accrued any compensation to date and has no written contract or any commitment to receive annual compensation. Messrs. Malobrodsky and Gorodyansky have agreed to forego any salary until such time as the Company has sufficient revenues therefore and/or receives sufficient outside financing. In the past, our founders have advanced funds to the Company as required. If, and when necessary, our founders may, at their sole option, advance funds to cover additional working capital as deemed necessary. If further funds are advanced, they will be evidenced by notes and will be treated as loans to be repaid, if and when we have the financial resources to do so. While we cannot predict exactly what our level of activity will be over the next 12 months, past experience leads us to believe that available capital resources will not be adequate to fund working capital requirements for the 12-month period which commenced January 1, 2013. We will therefore need to access additional capital through the issuance of additional equity and debt securities and other forms of outside funding, including additional loans from officers, directors and shareholders of the Company. There is no assurance can be accomplished to the necessary extent, if at all. (See "Liquidity"). Liquidity As of December 31, 2013, we had $1,669 in cash and negative working capital of $27,020. From its inception, the Company has been engaged since 2004 in the business of asset management and sales of high-end computerized networking equipment to emerging high technology companies. Commencing in 2011, the Company began providing advertising services to promote products and services of third parties (primarily a related company, Anchorfree Wireless, Inc.) to the Company's customer base. Under this business model, third parties pay the Company a fee to disseminate their advertising to the Company's customer base. This has now become the principal service product provided by the Company. While the Company has not abandoned its previous business plan, it is not being actively pursued at this time. 6 The potential exists that our available capital resources may not be adequate to fund our working capital requirements based upon our present level of operations for the 12-month period subsequent to January 1, 2014. A shortage of capital would affect our ability to fund our working capital requirements. If we require additional capital, funds may not be available on acceptable terms, if at all. In addition, if we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could dilute existing shareholders. If funds are not available, this could materially adversely affect our financial condition and results of operations. Historically, we have depended on loans from our principal shareholders and their families and acquaintances to provide us with working capital as required. We do not have any credit facilities or other commitments for debt or equity financing. No assurance can be given that financing, when needed, will be available. To date, we have had discussions with potential sources of additional funding, however, the Company does not currently have any firm commitment with respect thereto. None of our shareholders is obligated to make any loans or advances to us and there can be no assurance that any of our shareholders will continue making loans or advances to us in the future. To meet commitments that are greater than 12 months in the future, we will have to operate our business in such a manner as produce positive cash flow and enhance our exposure in the market. There does not currently appear to be any other viable source of long-term financing except that management may consider various sources of debt and/or equity financing if same can be obtained on terms deemed reasonable to management. Going Concern. Our independent auditors have added an explanatory paragraph to their audit issued in connection with the financial statements for the period ended December 31, 2013, relative to our ability to continue as a going concern. The Company's total liabilities exceeded its total assets by $27,020. We had an accumulated deficit of $703,566 at December 31, 2013 and recorded a loss of $17,791 for the year ended December 31, 2013. Because our auditors have issued a going concern opinion, there is substantial uncertainty we will continue operations in which case you could lose your investment. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. Results of Operations for Comparative Years Ended December 31, 2013 and December 31, 2012 The following table summarizes the results of operations during the years ended December 31, 2013 and December 31, 2012: Percentage 12/31/13 12/31/12 Increase Increase Line Item (audited) (audited) (Decrease) (Decrease) Revenues $ 24,213 $ 27,870 $ (3,657 ) (13.12 )% Net loss (17,791 ) (2,059 ) (17,343 ) 842.30 % Expenses 42,004 29,929 12,075 40.35 %Earnings loss per share of common stock (0.00 ) (0.00 ) 0.00 (n/a) 7 Comparisons between Cost of Sales Selling, Administrative and General Expenses for the years ended December 31, 2013 and December 31, 2012 are as follows: 12 Months. 12 Months. Ended Ended 12/31/2013 12/31/2012 Cost of Sales $ 15,340 $ 0 Ratio of Cost of Sales to Sales 63.4 % 0 % Selling, General and Administrative Expenses $ 26,664 $ 29,929 We had a net loss of $17,791 for the year ended December 31, 2013 as compared with a net loss of $2,059 for the year ended December 31, 2012. This improvement was largely due to an increase in product sales and a decrease in advertising revenues. The Company's revenues in any given period is significantly affected the demand for the advertising and other services provided by the Company and by the working capital the Company has available to it Off Balance Sheet Arrangements We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities. Seasonality Our operating results are not affected by seasonality. Inflation Our business and operating results are not affected in any material way by inflation. Critical Accounting Policies The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The nature of our business generally does not call for the preparation or use of estimates. Due to the fact that the Company does not have any operating business, we do not believe that we do not have any such critical accounting policies. |