UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549FORM 10-Q

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
for the quarterly period ended August 31, 2012

OR

 ̈TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
for the transition period from ___________ to _____________

Commission file number: 000-25335

INTELLIGENT LIVING CORP.(Exact name of registrant as specified in its charter)

Nevada(State or other jurisdiction of incorporation or organization)

88-0409024(I.R.S. Employer Identification Number)

SUITE 221, 2323 QUEBEC STREET
Vancouver, BC
V5T 4S7(Address including zip code of principal executive offices)

Issuers telephone number: (604) 876-7494

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes þ 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 (§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 þ   No  ̈



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.



|                        |   |                                               |                           |  
|----------------------- | - | --------------------------------------------- | ------------------------- | -
|Large accelerated filer |  ̈ |                                               | Accelerated filer         |  ̈
|Non-accelerated filer   |  ̈ | (Do not check if a smaller reporting company) | 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 þ



As of October 15, 2012, the registrant had outstanding 12,807,975shares of its $.001 par value Common Stock.



Transitional Small Business Disclosure Format: Yes ̈  No þ



---

INTELLIGENT LIVING CORP.

FORM 10Q

For the Quarterly Period August 31, 2012



TABLE OF CONTENTS





Page



PART I

FINANCIAL  INFORMATION

3



ITEM 1

Unaudited Consolidated Financial Statements



Consolidated Balance Sheets as of August 31, 2012 (Unaudited) and May 31, 2012

3



Consolidated Statements of Operations for the Three Months ended

August 31, 2012 and August 31, 2011 (Unaudited)

4



Consolidated Statements of Cash Flows for the Three Months ended

August 31, 2012 and August 31, 2011 (Unaudited)

5



Condensed Notes to Consolidated Interim Financial Statements (Unaudited)

6



ITEM 2

Management's Discussion and Analysis of Financial Condition and Results of

Continuing and Future Plan of Operation

12



ITEM 3

Quantitative and Qualitative Disclosures about Market Risk

17



ITEM 4T

Controls and Procedures

18



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

19



ITEM 3

Defaults upon Senior Securities

19



ITEM 4

Mine Safety Disclosures

19



ITEM 5

Other Information

19



ITEM 6

Exhibits

19



SIGNATURE PAGE

20





2



---





PART  I.  FINANCIAL  INFORMATION



ITEM 1 - FINANCIAL STATEMENTS



|                                        |                                                                                                                              |              |              |             |              |        
|--------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ------------ | ------------ | ----------- | ------------ | -------
|INTELLIGENT LIVING CORP.               
|CONSOLIDATED BALANCE SHEETS            
|                                        |                                                                                                                              |              |              | August 31,  |              | May, 31
|                                        |                                                                                                                              |              |              | 2012        |              | 2012   
|                                        |                                                                                                                              |              |              | (unaudited) |              |        
|CURRENT ASSETS                          |                                                                                                                              |              |              |            
|                                        | Cash and cash equivalents                                                                                                    | $            | 34,334       | $           | 2,685       
|                                        | Accounts receivable, net                                                                                                     |              | 3,559        |             | 6,937       
|                                        | Accounts receivable related party                                                                                            |              | 13,634       |             | -           
|                                        | Prepaid expenses                                                                                                             |              | 3,564        |             | 3,441       
|                                        | Inventory, net                                                                                                               |              | 2,023        |             | 1,952       
|                                        | GST/PST tax refundable                                                                                                       |              | 83           |             | 156         
|                                        | TOTAL CURRENT ASSETS                                                                                                         | $            | 57,197       | $           | 15,171      
|                                        |                                                                                                                              |              |              |             |              |        
|                                        | PROPERTY & EQUIPMENT, NET                                                                                                    |              | 9,339        |             | 10,263      
|                                        |                                                                                                                              |              |              |             |              |        
|OTHER ASSETS                            |                                                                                                                              |              |              |            
|                                        | Other Assets,net                                                                                                             |              | -            |             | -           
|                                        |                                                                                                                              |              |              |             |             
|                                        | TOTAL OTHER ASSETS                                                                                                           |              | -            |             | -           
|                                        | TOTAL ASSETS                                                                                                                 | $            | 66,536       | $           | 25,434      
|                                        |                                                                                                                              |              |              |             |              |        
|LIABILITIES AND STOCKHOLDERS' (DEFICIT) |                                                                                                                              |              |              |            
|CURRENT LIABILITIES                     |                                                                                                                              |              |              |            
|                                        | Line of credit                                                                                                               |              | 45,396       |             | 43,437      
|                                        | Accounts payable                                                                                                             |              | 90,585       |             | 91,290      
|                                        | Accrued liabilities                                                                                                          |              | 260,933      |             | 278,779     
|                                        | Accrued interest                                                                                                             |              | 285,687      |             | 273,458     
|                                        | Short term notes                                                                                                             |              | 58,490       |             | 27,489      
|                                        | Short term notes convertible                                                                                                 |              | 75,000       |             | 75,000      
|                                        | Short term loans - related party                                                                                             |              | 388,108      |             | 350,232     
|                                        | Current liabilities related to discontinued operations                                                                       |              |              |             |             
|                                        |                                                                                                                              | Note payable |              | 52,250      |              | 61,250 
|                                        | TOTAL CURRENT LIABILITIES                                                                                                    | $            | 1,256,449    | $           | 1,200,935   
|                                        |                                                                                                                              |              |              |             |              |        
|LONG-TERM LIABILITIES                   |                                                                                                                              |              |              |            
|                                        | Debentures                                                                                                                   |              | 655,753      |             | 655,753     
|                                        | TOTAL LONG TERM LIABILITIES                                                                                                  |              | 655,753      |             | 655,753     
|                                        | TOTAL LIABILITIES                                                                                                            |              | 1,912,202    |             | 1,856,688   
|                                        |                                                                                                                              |              |              |             |              |        
|                                        | COMMITMENTS & CONTINGENCIES                                                                                                  |              | -            |             | -           
|                                        |                                                                                                                              |              |              |             |              |        
|STOCKHOLDERS' (DEFICIT)                 |                                                                                                                              |              |              |            
|                                        | Preferred stock, 5,000,000 shares authorized, $0.001 par value, 0 issued and outstanding                                     |              | -            |             | -           
|                                        | Common stock, 800,000,000 shares authorized, $0.001 par value; 12,807,975 and 12,507,975 issued and outstanding respectively |              | 12,808       |             | 12,508      
|                                        | Additional paid in capital                                                                                                   |              | 13,503,913   |             | 13,495,213  
|                                        | Accumulated deficit                                                                                                          |              | (15,259,891) |             | (15,251,400)
|                                        | Accumulated other comprehensive (loss)                                                                                       |              | (102,496)    |             | (87,575)    
|                                        | TOTAL STOCKHOLDERS' (DEFICIT)                                                                                                |              | (1,845,666)  |             | (1,831,254) 
|                                        | TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                  | $            | 66,536       | $           | 25,434      



See accompanying condensed notes to the interim consolidated financial statements



3



---







|                                                                         |                                                                               |          |                              |          |         
|------------------------------------------------------------------------ | ----------------------------------------------------------------------------- | -------- | ---------------------------- | -------- | --------
|INTELLIGENT LIVING CORP.                                                
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
|                                                                         |                                                                               |          | For the 3 month period ended
|                                                                         |                                                                               |          | August 31                   
|                                                                         |                                                                               |          | 2012                         |          | 2011    
|                                                                         |                                                                               |          |                              |          |         
|REVENUES                                                                 |                                                                               |          |                              |         
|                                                                         | Intelligent Home: Equipment & Services                                        | $        | 25,367                       | $        | 62,762  
|COST OF REVENUES                                                         |                                                                               |          |                              |         
|                                                                         | Intelligent Home: Equipment & Services                                        |          | 152                          |          | 33,014  
|GROSS PROFIT                                                             |                                                                               | 25,215   |                              | 29,748  
|                                                                         |                                                                               |          |                              |          |         
|EXPENSES                                                                 |                                                                               |          |                              |         
|                                                                         | Selling expense                                                               |          | -                            |          | 3,175   
|                                                                         | Salaries                                                                      |          | 1,807                        |          | 20,285  
|                                                                         | Depreciation                                                                  |          | 1,266                        |          | 3,062   
|                                                                         | Office & Administrative                                                       |          | 11,469                       |          | 41,103  
|                                                                         | TOTAL OPERATING EXPENSES                                                      |          | 14,542                       |          | 67,625  
|                                                                         |                                                                               |          |                              |          |         
|GAIN (LOSS) FROM OPERATIONS                                              |                                                                               | 10,673   |                              | (37,877)
|                                                                         |                                                                               |          |                              |          |         
|OTHER INCOME (EXPENSE)                                                   |                                                                               |          |                              |         
|                                                                         | Interest income                                                               |          | -                            |          | 83      
|                                                                         | Interest expense                                                              |          | (19,164)                     |          | (19,034)
|                                                                         | TOTAL OTHER INCOME (EXPENSE)                                                  |          | (19,164)                     |          | (18,951)
|                                                                         |                                                                               |          |                              |          |         
|INCOME (LOSS) FROM CONTINUING OPERATIONS                                 |                                                                               | (8,491)  |                              | (56,828)
|                                                                         |                                                                               |          |                              |          |         
|(LOSS) FROM DISCONTINUED OPERATIONS                                      |                                                                               | -        |                              | (589)   
|                                                                         |                                                                               |          |                              |          |         
|CONSOLIDATED NET (LOSS) BEFORE INCOME TAX                                |                                                                               | (8,491)  |                              | (57,417)
|                                                                         | Income Tax Expense                                                            |          | -                            |          | -       
|NET (LOSS)                                                               |                                                                               | (8,491)  |                              | (57,417)
|                                                                         | EARNINGS PER SHARE BASIC AND DILUTED                                          |          |                              |          |         
|                                                                         | (Loss) income per share from continuing operations                            |          | (0.00)                       |          | (0.08)  
|                                                                         | (Loss) per share from discontinued operations                                 |          | -                            |          | (0.00)  
|                                                                         | Net (Loss) per share                                                          |          | (0.00)                       |          | (0.08)  
|                                                                         | Weighted average number of common stock shares outstanding, basic and diluted |          | 12,785,149                   |          | 706,302 
|                                                                         |                                                                               |          |                              |          |         
|OTHER COMPREHENSIVE GAIN (LOSS)                                          |                                                                               |          |                              |         
|                                                                         | Foreign currency translation gain (loss)                                      |          | (14,921)                     |          | 754     
|                                                                         |                                                                               |          |                              |          |         
|COMPREHENSIVE (LOSS)                                                     | $                                                                             | (23,412) | $                            | (56,663)





See accompanying condensed notes to the interim consolidated financial statements





4



---







|                                                  |                                           |                                              |                                   |         |                              |       |         
|------------------------------------------------- | ----------------------------------------- | -------------------------------------------- | --------------------------------- | ------- | ---------------------------- | ----- | --------
|INTELLIGENT LIVING CORP.                         
|CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|                                                  |                                           |                                              |                                   |         | For the 3 month period ended
|                                                  |                                           |                                              |                                   |         | August 31,                  
|                                                  |                                           |                                              |                                   |         | 2012                         |       | 2011    
|                                                  |                                           |                                              |                                   |         |                              |       |         
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                           |                                              |                                   |        
|                                                  | Net loss                                  | $                                            | (8,491)                           | $       | (57,417)                    
|                                                  | Adjustments to reconcile net loss         |                                              |                                   |         |                             
|                                                  |                                           | to net cash used in operating activities:    |                                   |         |                              |      
|                                                  |                                           |                                              | Depreciation / Amortization       |         | 1,266                        |       | 3,062   
|                                                  |                                           | Decrease (increase), net of acquisition, in: |                                   |         |                              |      
|                                                  |                                           |                                              | Accounts receivable               |         | 3,378                        |       | (13,737)
|                                                  |                                           |                                              | Accounts receivable related party |         | (13,634)                     |       | 5,357   
|                                                  |                                           |                                              | Prepaid expenses                  |         | (123)                        |       | -       
|                                                  |                                           |                                              | Inventory                         |         | -                            |       | (7,916) 
|                                                  |                                           | Increase (decrease), net of acquisition, in: |                                   |         |                              |      
|                                                  |                                           |                                              | Accrued liabilities and interest  |         | (5,625)                      |       | 21,680  
|                                                  |                                           |                                              | Accounts payable                  |         | (705)                        |       | 8,077   
|                                                  |                                           |                                              | GST tax refundable                |         | 73                           |       | 782     
|                                                  | Net cash used in operating activities     |                                              | (23,861)                          |         | (40,112)                    
|                                                  |                                           |                                              |                                   |         |                              |       |         
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                           |                                              |                                   |        
|                                                  |                                           |                                              |                                   |         |                              |       |         
|                                                  | Net cash used in investing activities     |                                              | -                                 |         | -                           
|                                                  |                                           |                                              |                                   |         |                              |       |         
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                           |                                              |                                   |        
|                                                  | Bank Line of Credit                       |                                              | 1,959                             |         | 3,928                       
|                                                  | Proceeds of loans                         |                                              | 30,267                            |         | -                           
|                                                  | Proceeds of loans, related party          |                                              | 77,521                            |         | 35,083                      
|                                                  | Repayment of loans, related party         |                                              | (51,792)                          |         | -                           
|                                                  | Net cash provided by financing activities |                                              | 57,955                            |         | 39,011                      
|                                                  |                                           |                                              |                                   |         |                              |       |         
|Net increase (decrease) in cash                   |                                           | 34,094                                       |                                   | (1,101)
|                                                  |                                           |                                              |                                   |         |                              |       |         
|                                                  | Effect of foreign exchange on cash        |                                              | (2,445)                           |         | 757                         
|                                                  |                                           |                                              |                                   |         |                              |       |         
|Cash, beginning of period                         |                                           | 2,685                                        |                                   | 3,475  
|                                                  |                                           |                                              |                                   |         |                              |       |         
|Cash, end of period                               | $                                         | 34,334                                       | $                                 | 3,131  
|                                                  |                                           |                                              |                                   |         |                              |       |         
|SUPPLEMENTAL DISCLOSURES:                         |                                           |                                              |                                   |        
|                                                  | Cash paid for interest and income taxes:  |                                              |                                   |         |                             
|                                                  |                                           | Interest                                     | $                                 | 6,943   | $                            | 5,838
|                                                  |                                           | Income taxes                                 | $                                 | -       | $                            | -    
|                                                  |                                           |                                              |                                   |         |                              |       |         
|NON-CASH INVESTING AND FINANCING ACTIVITIES:      |                                           |                                              |                                   |        
|                                                  | Common stock issued for debt and interest | $                                            | 9,000                             | $       | -                           



See accompanying condensed notes to the interim consolidated financial statements





5



---

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2012

(Unaudited)





NOTE 1  BASIS OF PRESENTATION



Intelligent Living Corp (ILC, the Company, we, us) was incorporated in the State of Nevada in 1998. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and has historically offered automation technology for single and multi unit new construction and existing buildings. The Company specialized in designing, supplying, installing, upgrading and servicing control and automation solutions including: energy use monitoring and conservation systems, security and access control systems, lighting control systems, HVAC and environmental controls, and distributed audio/video systems. Incorporated in 1994, MCM has supplied home automation and energy management solutions since 2003. The Company maintains offices in Vancouver, British Columbia and Phoenix, Arizona. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.



The Company previously engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations and evaluate ways and means to recover costs related to the home décor import and distribution business. This process concluded during the year ended May 31, 2012 and any future impact on ongoing operations is expected to be de minimis.



In 2008 the Company shifted its focus to the western Canadian housing market. The western Canadian housing market, and in particular the greater Vancouver housing market, has remained strong through the US housing downturn with new construction and renovation projects, and ongoing momentum in home sales and re-sales.



The market opportunities for the Companys control and automation services and products and associated project margins are enhanced when combined with overall building design and construction. Over several quarters the Company has actively evaluated opportunities to expand its business activities vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within the construction and renovation sectors. During FY 2012 the Company began planning the expansion of its activities to include: design build services targeting small footprint energy efficient housing, specific to the needs of North American Indian communities and emergency relief housing and multi-strata property renovation and development. These areas of business capitalize on the Companys in-house engineering, design and project management capabilities and will incorporate automation and control as standard features. Early in the planning process it became clear that restructuring would be required in order for the Company to attract the working capital financing required to support expansion.



On October 31, 2011 the Companys board of directors approved a Consent Resolution amending the Companys Articles of Incorporation to affect a one for one hundred and fifty reverse split of the Companys common stock, and adjustment of the Companys authorized capital to eight hundred million common shares and five million preferred shares. The proposed amendments were approved by a majority of shareholders on November 1, 2011. The Company filed a preliminary Schedule 14C Information Statement outlining proposed amendments to the Companys Articles of Incorporation on November 9, 2011 and a definitive Schedule 14C Information Statement on November 25, 2011. The Company set November 25, 2011 as the record date for notification to shareholders. The Company filed the amended Articles of Incorporation with the Nevada Secretary of State on December 12, 2011, with an effective posting date of December 22, 2011. The reverse split was approved for trading purposes by the Financial Industry Regulatory Authority [FINRA] on January 18, 2012.





6



---

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2012

(Unaudited)





Restructuring was completed during the year ended May 31, 2012 and the Company has begun implementation of its diversification strategy.



Results from ongoing operations reported for the periods ending August 31, 2012 and August 31, 2011 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support.



The Companys year-end is May 31.



The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the audited financial statements for the period ended May 31, 2012. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.



The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.



The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered material recurring losses from operations since inception. At August 31, 2012, the Company had a working capital deficit of $1,199,252, an accumulated deficit of $15,259,891 and historically has reported negative cash flows from consolidated operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.



Continuation of the Company is dependent on achieving sufficiently profitable operations and obtaining additional financing. Management has and is continuing to raise additional capital from various sources. There can be no assurances that the Company will be continue to be successful in raising additional capital. The financial statements do not include any adjustment relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



This summary of significant accounting policies of Intelligent Living Corp. is presented to assist in understanding the Companys financial statements.  The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.





7



---

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2012

(Unaudited)





Earnings per Share

The Company has adopted ASC 260 Earnings per Share.  Basic loss per share is computed using the weighted average number of common shares outstanding.   Diluted net loss per share is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.



Fair Value of Financial Instruments

On July 1, 2008, the Company adopted Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (Topic 820).  Topic 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

·

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.



The following table represents our assets and liabilities by level measured at fair value on a recurring basis at August 31, 2012



|            |         |         |        
|----------- | ------- | ------- | -------
|Description | Level 1 | Level 2 | Level 3
|            | None    | None    | none   



The adoption of this standard did not have a material effect on the Companys financial position, results of operations or cash flows.



Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. The guidance improves the comparability of financial reporting and facilitates the convergence of U.S. GAAP and IFRS be amending the guidance in ASC 220, Comprehensive Income.  Under the amended guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. This guidance is effective retrospectively for annual and interim periods beginning after December 15, 2011.  The adoption of the guidance is not expected to have a material impact on the Company's Consolidated Financial Statements or the Notes thereto.



In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment (the revised standard).  Under ASU No. 2011-08 companies have the option to perform a qualitative assessment that may allow them to skip the annual two-step test and reduce costs.  The guidance is effective for fiscal years beginning after December 15, 2011 and earlier adoption is permitted.



In December 2011, the FASB issued ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities. Under ASU 2011-11 disclosures are required to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the ASU requires disclosure of collateral received and



8



---

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2012

(Unaudited)





posted in connection with master netting agreements or similar arrangements. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013.



The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and 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, or cash flows.



NOTE 3 - COMMON STOCK



During the three months ended August 31, 2012 the Company issued 300,000 shares of its unregistered common stock for conversion of $9,000 of debt principal. The conversion was made in accordance with the terms of the underlying agreement.



NOTE 4  RELATED PARTIES



The Company had short-term loans outstanding to corporate officers at May 31, 2012 in the amount of $350,232. They are unsecured, due on demand and bear interest at an average rate of 9.7%. Accrued interest to May 31, 2012 was $785.



During the three months ended August 31, 2012 the balance sheet liability associated with loans from the Companys officers increased by $37,876. These loans are uncollateralized and due on demand. The Company paid the Companys officers $6,943 of interest in cash, accrued interest of $344. Total outstanding related party debt [principal plus accrued interest] for the period ended August 31, 2012 and May 31, 2012 was respectively $389,237 and $351,017.



The following table summarizes the position of notes, and amounts due to related parties at August 31, 2012:

|                 |   |                                          |   |                                    
|---------------- | - | ---------------------------------------- | - | -----------------------------------
|Related Parties  |   | Principal
Outstanding
on August 31,
2012 |   | Interest
Accrued to
August 31,
2012
|Short-term notes | $ | 388,108                                  | $ | 1,129                              
|Total            | $ | 388,108                                  | $ | 1,129                              



The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech), a company controlled by Murat Erbatur the Companys COO. The Company provides technical consulting services to ScanTech and Scan Techs clients on an as needed basis. For the period ended August 31, 2012 the total value of services provided was $15,134.



NOTE 5  THIRD PARTY NOTES AND DEBENTURES PAYABLE



During the 12 months ended May 31, 2012 the Company reclassified $80,000 of accrued liability into a non interest bearing convertible note maturing on June 1, 2012.  The accrued liability resulted from professional fees payable under a consulting contract dated July 2010.  Pursuant to terms of the consulting contract, the note formalizes the Companys option to settle the outstanding liability through issuance of common stock and the effective date of the note tacks back to December 2010 reflecting the period in which the Company realized the benefit of the services.  The note is convertible into shares of the Companys common stock at a conversion price not less than the greater of $0.0005 per share or the lowest closing price of the Companys Common Stock for any trading day on which a Notice of Conversion is received, or for any of the 20 consecutive days on which shares of the Company traded immediately preceding the date of receipt of each



9



---

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2012

(Unaudited)





Notice of Conversion.  The Company determined that there was no derivative liability or beneficial conversion associated with the note.



During the period ended May 31, 2012 the Company converted $18,750 of third party short term note principal into 625,000 shares of common stock at a share price of $0.03 per share. The conversion was made in accordance with the underlying debt agreement. The total short term third party non-interest bearing note principal outstanding on May 31, 2012 was $88,739.



In the 12 months ended May 31, 2012 the Company converted $37,500 of debenture principal and into 1,250,000 shares of the Companys common stock. All conversions were within terms of the underlying agreements. The total $730,753 debenture principal outstanding on May 31, 2012 consists of: $75,000 in short term debentures and $655,753 in long term debentures.



All outstanding notes and debentures were evaluated for embedded derivatives in accordance with ASC 815 and were found to not include any embedded derivatives.



During the quarter ended August 31, 2012 the Company converted $9,000 of short term note principal into 300,000 shares of the Companys common stock. The conversion was within the terms of the underlying agreement.



During the quarter ended August 31, 2012 the Company negotiated a short term non-interest bearing short term loan in the amount of $30,267.



Third party short term principal outstanding on August 31, 2012 was $185,740, consisting of note principal $110,740 and debenture principal $75,000. Total third party long term principal outstanding on August 31, 2012 consisted of debenture principal of $655,753. Total outstanding third party principal outstanding on August 31, 2012 was $841,493.



The following tables summarize the outstanding principal and discounts associated with debentures and notes outstanding at May 31, 2012 and August 31, 2012.



|                           |                     |                                       |                            |                                   
|-------------------------- | ------------------- | ------------------------------------- | -------------------------- | ----------------------------------
|May 31, 2012              
|Debentures                 | Notes               | Total                                
|Principal at end
of period | Remaining
Discounts | Balance Sheet
Amount net of
discounts | Principal at end
of period | End of Period
Balance Sheet
Amount
|$730,753                   | nil                 | 730,753                               | 88,739                     | 819,492                           
|August 31, 2012           
|Debentures                 | Notes               | Total                                
|Principal at end
of period | Remaining
Discounts | Balance Sheet
Amount net of
discounts | Principal at end
of period | End of Period
Balance Sheet
Amount
|$730,753                   | nil                 | $730,753                              | $110,740                   | $841,493                          





10



---

INTELLIGENT LIVING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2012

(Unaudited)





The principal and accrued interest on notes and debentures as at May 31, 2012 and August 31, 2012 are summarized in the following tables:

|                       |   |                                  |                                |   |                                 
|---------------------- | - | -------------------------------- | ------------------------------ | - | --------------------------------
|Notes and Debentures   |   | Principal
Amount at
May 31, 2012 | Weighted
Average
Interest Rate |   | Accrued Interest
to
May 31, 2012
|Third Party Notes      | $ | 88,739                           | NIL                            | $ | NIL                             
|Third Party Debentures |   | 730,753                          | 6.5%                           |   | 272,672                         
|Total                  | $ | 819,492                          | 5.8%                           | $ | 272,672                         





|                       |   |                                  |                                |   |                              
|---------------------- | - | -------------------------------- | ------------------------------ | - | -----------------------------
|Notes and Debentures   |   | Principal
Amount at
Aug 31, 2012 | Weighted
Average
Interest Rate |   | Accrued Interest
Aug 31, 2012
|Third Party Notes      | $ | 110,740                          | NIL                            | $ | nil                          
|Third Party Debentures |   | 730,753                          | 6.5%                           |   | 284,577                      
|Total                  | $ | 841,493                          | 5.8%                           | $ | 284,577                      



Principal payments on loans and debentures payable in the years ending May 31, 2013 through 2017 are as follows:

|            |          
|----------- | ---------
|Fiscal
Year | Principal
|2013        | $185,740 
|2014        | $232,480 
|2015        | $423,273 
|2016        | -        
|2017        | -        
|Total       | $841,493 





NOTE 6  DISCONTINUED OPERATIONS



In prior periods the Company disposed of all discontinued inventory and fully depreciated all plant and equipment assets. At August 31, 2012, assets from discontinued operations were de minimis.



Liabilities from discontinued operations consisted of:



|                                                     |   |              |                 |       
|---------------------------------------------------- | - | ------------ | --------------- | ------
|Description                                          |   | May 31,
2012 | August 31,
2012
|Note Payable                                         | $ | 61,250       | $               | 52,250
|Total liabilities related to discontinued operations | $ | 61,250       | $               | 52,250



NOTE 8  SUBSEQUENT EVENTS



There were no subsequent events from the end of the quarter to the date of issuance of this filing







11



---





INTELLIGENT LIVING CORP.

FORM 10-Q

For the Quarterly period ended August 31, 2012



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF CONTINUING AND FUTURE PLAN OF OPERATION



Cautionary Statement Regarding Forward-Looking Statements.This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions or words which, by their nature, refer to future events.



In some cases, you can also identify forward-looking statements by terminology such as "may", "will", "should", "plans", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.



Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.



OVERVIEW



Intelligent Living Corp (ILC, the Company, we, us) was incorporated in the State of Nevada in 1998. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (MCM) the Company operates in the green building sector and has historically offered automation technology for single and multi unit new construction and existing buildings. The Company specialized in designing, supplying, installing, upgrading and servicing control and automation solutions including: energy use monitoring and conservation systems, security and access control systems, lighting control systems, HVAC and environmental controls, and distributed audio/video systems. Incorporated in 1994 MCM has supplied home automation and energy management solutions since 2003. The Company maintains offices in Vancouver British Columbia and Phoenix Arizona. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.



The Company previously engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations and evaluate ways and means to recover costs related to the home décor import and distribution business. This process concluded during the year ended May 31, 2012 and any future impact on ongoing operations is expected to be de minimis.



In 2008 the Company shifted its focus to the western Canadian housing market. The western Canadian housing market, and in particular the greater Vancouver housing market, has remained strong through the US housing downturn with new construction and renovation projects, and ongoing momentum in home sales and re-sales.



The market opportunities for the Companys control and automation services and products and associated project margins are enhanced when combined with overall building design and construction. Over several quarters the Company has actively evaluated opportunities to expand its business activities vertically within the



12



---





Companys current green building, home automation and energy conservation sectors and horizontally within the construction and renovation sectors. During FY 2012 the Company began planning the expansion of its activities to include: design build services targeting small footprint energy efficient housing, specific to the needs of North American Indian communities and emergency relief housing and multi-strata property renovation and development. These areas of business capitalize on the Companys in-house engineering, design and project management capabilities and will incorporate automation and control as standard features. Early in the planning process it became clear that restructuring would be required in order for the Company to attract the working capital financing required to support expansion.



On October 31, 2011 the Companys board of directors approved a Consent Resolution amending the Companys Articles of Incorporation to affect a one for one hundred and fifty reverse split of the Companys common stock, and adjustment of the Companys authorized capital to eight hundred million common shares and five million preferred shares. The proposed amendments were approved by a majority of shareholders on November 1, 2011. The Company filed a preliminary Schedule 14C Information Statement outlining proposed amendments to the Companys Articles of Incorporation on November 9, 2011 and a definitive Schedule 14C Information Statement on November 25, 2011. The Company set November 25, 2011 as the record date for notification to shareholders. The Company filed the amended Articles of Incorporation with the Nevada Secretary of State on December 12, 2011, with an effective posting date of December 22, 2012. The reverse split was approved for trading purposes by the Financial Industry Regulatory Authority [FINRA] on January 18, 2012.



Restructuring was completed during the year ended May 31, 2012 and the Company has begun implementation of its diversification strategy.



Results from ongoing operations reported for the periods ending August 31, 2012 and August 31, 2011 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support.



Foreign currency translation

MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entitys functional currency are translated into the entitys functional currency at the exchange rate ruling on the date of the transaction. Currency translation differences are recognized in the statement of income for the period.



On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.



During the three month period June 1, 2012 through August 31, 2012, the US dollar to Canadian Dollar exchange rate has varied from a low of 0.9601 on June 3 and 5, 2012 to a high of 1.0129 on August 22, 2012. The closing exchange rate was 1.0089 and the average exchange rate over the three month period ended August 31, 2012 was 0.9883 resulting in comprehensive income of ($14,921) for the period ended August 31, 2012.



Transactions with related parties

Our By-Laws include a provision regarding related party transactions which requires that each participant to such transaction identify all direct and indirect interests to be derived as a result of the Company's entering into the related transaction. A majority of the disinterested members of the board of directors must approve any related party transaction.





13



---





Except for the transactions described below, none of our directors, senior officers or principal shareholders, nor any associate or affiliate of the foregoing have any interest, direct or indirect, in any transaction, since the beginning of the fiscal year ended May 31, 2012, or in any proposed transactions, in which such person had or is to have a direct or indirect material interest.



During the year ended May 31, 2012, the Companys CEO loaned the Company $42,645 and the Companys COO loaned the Company $9,530. These amounts are uncollateralized and due on demand. The Company paid $25,828 in interest to its COO in cash and accrued $7,868 in interest due the Companys CEO.



During the year ended May 31, 2012 $180,000 of accrued liabilities, $115,388 of short term note payable and $2,612 of accrued interest due the Companys CEO was consolidated into a debenture bearing  interest at a rate of 6%. The debenture and $5,780 of accrued interest were converted into 9,926,000 shares of common stock of the Company at an average price of $0.03 per share. The conversion was made in accordance with the underlying debt agreement.



During the three month period ended August 31, 2012, the balance sheet liability associated with short term loan principal due the Companys CEO increased by $18,529. During the three months ended August 31, 2012 the balance sheet liability associated with short term principal due the Companys COO increased by $19,348. Related party short term loans are uncollateralized and due on demand. The Company repaid the Companys COO $6,943 in interest in cash and accrued $344 in interest due the Companys CEO. Total outstanding related party debt [principal plus accrued interest] for the period ended August 31, 2012 and May 31, 2012 was respectively $389,237 and $351,017.



The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech), a company controlled by Murat Erbatur the Companys COO. The Company provides technical consulting services to ScanTech and Scan Techs clients on an as needed basis. For the period ended August 31, 2012 the total value of services provided was $15,134.

RESULTS OF OPERATIONS  for the three months ended August 31, 2012 and August 31, 2011



For the three months ended August 31, 2012, revenues from continuing operations were $25,367 compared to $62,762 in the same period in the prior year, a decrease of 60%. The decrease in revenue is the net of an 80% reduction in the value of sub-contract residential installations as a result of the Companys decision to phase out of sub-contract work and transition to design build services, and a 100% increase in professional fees associated with technical consulting work.



For the three months ended August 31, 2012, gross profit was $25,215 compared to $29,748 in the same period in the prior year, a decrease of 15%. Gross margin (gross profit as a percent of revenue) was 99%, compared to 47% for the same period in the prior year. Gross profit is the net of revenue less the cost of goods. In the current quarter the Companys cost of goods was low compared to prior quarters. This resulted because revenues were substantially due to professional time billed for completion of sub-contract work and technical consulting which does not have any associated cost of materials. This resulted in the large increase in gross margin reflecting the low cost of revenue associated with professional fees.



Operating expenses for the three months ending August 31, 2012 were $14,542 versus $67,625 for the corresponding period in the prior year. The year to date operating expense decrease of 78% resulted from the elimination of selling expenses, a 91% decrease in salary costs as a result of decreased staff levels, a 59% decrease in depreciation expenses, and a 72% decrease in administration expenses resulting principally from across the board reduced costs of services and supplies.



The Company recorded an operating profit of $10,673 for the three month period ended August 31, 2012 compared to an operating loss of (37,877) for the comparable period in the prior year.



Total other expenses for the three month period ending August 31, 2012 were $19,164 compared to $19,540 for the comparable period in the prior year, a decrease of 2%.



14



---





The net loss from continuing operations for the three month period ending August 31, 2012 was ($8,491) compared to a net loss of ($56,828) in the comparable period in the prior year, a decrease of 85%.



During the three month period ended August 31, 2012 the Company did not incur expenses associated with its discontinued wholesale business. In the comparable period in the prior year the net loss from discontinued operations was ($589). The elimination of expenses is a result of the windup of discontinued operations during the year ended May 31, 2012.



The consolidated net loss for the three months ended August 31, 2012 was ($8,491) compared to a consolidated net loss of ($57,417) for the corresponding period in the prior year. A loss of ($14,921) was realized as a result of foreign currency translation and the resulting comprehensive loss for the period ending August 31, 2012 was $(23,412) compared to a gain of $754 as a result of foreign currency translation and a comprehensive loss of ($56,663) for the corresponding period in the prior year.



LIQUIDITY AND CAPITAL RESOURCES



Liquidity

As of August 31, 2012, our principal sources of liquidity included cash and cash equivalents, cash flow from our operating subsidiary, and shareholder and related party loans. At August 31, 2012, cash and cash equivalents totaled $34,334 compared to $2,685 at May 31, 2012.



Our business continues in transition and our liquidity must be considered in light of the risks, expenses and difficulties frequently encountered by companies in our stage of re-development. The Company has historically operated in both the US and Canadian markets. The transition to the home automation sector through the acquisition of MCM Integrated Technologies occurred at the same time that the U.S. housing market entered a protracted period of substantially reduced home construction and renovation activity, declining home prices, extensive mortgage foreclosures and a contraction in the availability of consumer credit. The ongoing impairment in the U.S. and Canadian economies and financial markets has and will continue to impact the Companys sales and liquidity for the foreseeable future.



Risk factors relevant to these events and management decisions include, but are not limited to: the success of the Companys diversification strategy and initiative, Companys ability to secure ongoing product supply, foreign exchange fluctuations, continued acceptance of the Companys products and services, changes in technology and consumer adoption of technology, intense competition, the strength of the North American housing market and consumer economy in general, and cannot be credibly quantified by the Company at this time.



Internal and External Sources of Capital

For the three month period ending August 31, 2012 the Company realized a profit from operations of $10,673 and a net loss of ($8,491). As of August 31, 2012 the Company had a working capital deficit of $1,199,252 and limited assets to sell in order to create short or long term liquidity. Therefore, we are dependent on external sources for funding until such time as the Company develops positive net cash flow to maintain liquidity. Until such time as we have positive cash flow on a sustained basis, the dependence on external capital will remain. There are no guarantees that we will be able to raise external capital in sufficient amounts or on terms acceptable to us.



Investing Activities

There were no investing activities during the three month period ending August 31, 2012.



Financing Activities

Since inception, we financed operations through proceeds from the issuance of equity and debt securities and loans from shareholders and others. To date, we raised approximately $13.5 million from the sale of common stock and as at August 31, 2012 we have borrowings of approximately $1.23 million from investors and shareholders.  Funds from these sources were used as working capital to fund the development of the Company.





15



---





In the three month period ended August 31, 2012 the balance sheet value of the Companys related party short term loans increased by $37,876, the Companys line of credit increased by $1,959 These loans are interest bearing and due on demand. The Company negotiated a third party convertible non-interest bearing loan of $30,267.



FUTURE PLAN OF OPERATIONS



Beginning in 2008 the Company shifted its focus to the western Canadian housing market. The western Canadian housing market, and in particular the greater Vancouver housing market, has remained strong through the US housing downturn with new construction and renovation projects, and ongoing momentum in home sales and re-sales. Through 2012 the U.S. housing market continued to remain depressed with some signs of a market bottom having been reached. The Company will remain focused on the Canadian market until such time as the US market gains upward momentum and or until a significant market opportunity becomes available.



The Company is actively pursuing expansion both vertically within the Companys current green building, home automation and energy conservation sectors and horizontally within related sectors including home construction and development. The Company is pursuing expansion opportunities in parallel with a shift in the Company's focus from supplier/sub-contractor to prime contractor/developer. This shift in focus will allow the Company to gain greater financial and market leverage from its knowhow and engineering and project management capabilities. This shift will also increase the Company's flexibility to pursue project and development opportunities. This shift of focus is expected to result in a short term impact on revenue as the Company is not actively pursuing new supplier/sub-contractor business.



Beginning in the second quarter of FY 2011 the Company began discussions with a local specialty builder and entered into a non-binding letter of intent to explore joint opportunities for property development within the greater Vancouver area, design build housing specific to the needs of First Nations communities and small economical fast erecting relief housing.  The Company initially favored a joint venture approach to these markets; however, after detailed analysis of structural and financial cost benefits, the Company is pursuing these opportunities as the prime contractor/developer.



This effort has led to eco and energy friendly designs for single family housing, a multi-suite elders residence and small footprint relief housing. The designs capitalize on modular construction techniques and utilize advanced building systems. The Company is in negotiation with a coastal First Nations band for turnkey design build housing and has executed Memorandum of Understanding and Non-Disclosure agreements with Coast Tsimshian Resources LP a major First Nations owned timber supplier to jointly pursue domestic markets for Native American Indian housing in both Canada and US and offshore markets for small footprint relief housing. The opportunity to supply housing to Native American Indian communities is extensive and the Company plans to focus effort on developing this market over the coming year.



The Company has also undertaken extensive pro-forma analysis of multi-strata development opportunities within greater Vancouver communities that have zoning approval for building multi-units on single family residential lots. The Company recently completed a major renovation of a penthouse condominium in Vancouver. This project is a blueprint and showcase for the Companys green building, home automation and energy conservation capabilities. The Company is working with a realtor specializing in Vancouvers urban core evaluating renovation opportunities and is actively looking at ways and means of securing development funding.



Cash flow from ongoing business activities combined with the availability of loans from related and third parties are estimated to be sufficient to sustain the current level of operations and planned activities through to the end of the 2013 fiscal year.



OFF BALANCE-SHEET ARRANGEMENTS



During year ended May 31, 2012, and the three months ended August 31, 2012 the Company did not engage in any off-balance sheet arrangements.



16



---







ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Interest Rate Risk



Our exposure to market risk for changes in interest rates relates primarily to our bank credit facility because borrowings under the facility are variable rate borrowings. At the current time all of the borrowings under our credit agreements accrue interest at the Prime Rate plus an applicable margin. Assuming that the balance on our variable interest loans as of August 31, 2012, was the same throughout the entire quarter, each 1.0% increase in the prime interest rate on our variable rate borrowings would result in an increase in annual interest expense and a decrease in our cash flows and income before taxes of approximately $3,570 per year.



Foreign Currency Exchange Risks



Our home automation subsidiary (MCM) and discontinued home décor subsidiary (Cardinal Points) have operations in Canada, both have assets and liabilities in Canadian dollars and both use the Canadian Dollar as a functional currency.  Each financial period, all assets, including goodwill, and liabilities of MCM and Cardinal Points are translated into U.S. Dollars, our reporting currency, using the closing rate method. In addition, we routinely purchase goods in Canadian dollars for resale in US dollars and goods in US dollars for resale in Canadian dollars.



There are principally two types of foreign exchange risk: transaction risks and translation risks. Transaction risks may impact the results of operations and translation risks may impact comprehensive income.  These are discussed more fully below.



Transaction risks



Transactions in currencies other than the functional currency are translated at either an average exchange rate used for the reporting period in which the transaction took place (to approximate to the exchange rate at the date of transactions for that period) or in some cases the rate in effect at the date of the transaction.  Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is settled or translated, are recognized in the consolidated statements of operations as foreign exchange transaction gains and losses.



MCMs and Cardinal Points cash balances consist of Canadian Dollars and U.S. Dollars. This exposes us to foreign currency exchange rate risk in the Statement of Operations. The change in exposure from period to period is related to the change in the balance of the bank accounts based on timing of event receipts and payments.  For the three month period ended August 31, 2012, the Company did not purchase goods valued in US dollars for sale in Canadian dollars and was not subject to transaction risk.



Translation risks



The financial statements of MCM and Cardinal Points, with a functional currency of Canadian dollars, are translated into U.S. dollars using the current rate method.  Accordingly, assets and liabilities are translated at period-end exchange rates while revenue, expenses and cash flows are translated at reporting period weighted average exchange rates.  Adjustments resulting from these translations are accumulated and reported as the principal component of other comprehensive loss in stockholders equity.



Fluctuation in exchange rates resulted in a year-to-date foreign currency translation loss of ($14,921) on August 31, 2012.  Future changes in the value of the U.S. dollar to Canadian dollar could have a material impact on our financial position.



17



---







ITEM 4T. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures



In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Chief Executive, Principal Financial and Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of August 31, 2012. Based on that evaluation the Chief Executive, Principal Financial and Accounting Officer has concluded that, as of the end of the period covered by this report, there was a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the issuers annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to the lack of monitoring or review of work performed by our management and lack of segregation of duties.  As of August 31, 2012, in the preparation of audited financial statements, footnotes and financial data, all of our financial reporting was carried out solely by our chief financial and accounting officer and we did not have an audit committee to monitor and review the work performed. The lack of segregation of duties resulted from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. Based on this evaluation the Chief Executive and Principal Financial Officer has concluded that as of the end of the period covered by this report, the Companys disclosure controls and procedures were not effective.



Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, 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. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles.  Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.



Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.





18



---







PART II. OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS



We are not currently involved in any litigation, nor do we know of any threatened litigation against us that would have a material effect on our financial condition.



ITEM 1A.  RISK FACTORS



Not applicable.



ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



During the three month period ended August 31, 2012 the Company converted $9,000 of third party debt principal into 300,000 shares of unregistered common stock at an average price of $0.03 per share. The conversion was made in accordance with the underlying debt agreement.



The Company offered and sold the securities in reliance on an exemption from federal registration under Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), and Rule 506 promulgated thereunder, or alternatively, under Regulation S promulgated under the Securities Act .



ITEM 3.  DEFAULTS UPON SENIOR SECURITIES



None.



ITEM 4.  MINE SAFETY DISCLOSURES.



Not applicable.



ITEM 5.  OTHER INFORMATION



None



ITEM 6.  EXHIBITS





|           |                                                                                                                                                              
|---------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|NO.        | DESCRIPTION                                                                                                                                                  
|31         | Certification of Michael Holloran Pursuant to Section 302 of the -Sarbanes-Oxley Act of 2002, filed herewith                                                 
|32         | Certification of Michael F. Holloran Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
|           |                                                                                                                                                              
|101.INS(1) | XBRL Instance Document                                                                                                                                       
|101.SCH(1) | XBRL Taxonomy Extension Schema Document                                                                                                                      
|101.CAL(1) | XBRL Taxonomy Extension Calculation Linkbase Document                                                                                                        
|101.DEF(1) | XBRL Taxonomy Extension Definition Linkbase Document                                                                                                         
|101.LAB(1) | XBRL Taxonomy Extension Label Linkbase Document                                                                                                              
|101.PRE(1) | XBRL Taxonomy Extension Presentation Linkbase Document                                                                                                       



(1)

To be filed by amendment.





19



---







SIGNATURES





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







INTELLIGENT LIVING CORP



By: /s/ Michael F. Holloran

-------------------------------------

Michael F. Holloran

President, Chief Executive Officer, and

Principal Financial and Accounting Officer



Dated:  October 22, 2012







20