Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2011
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
________ to ________.
Commission File Number: 333-161699
PMX COMMUNITIES, INC.
(Exact name of Registrant as specified in its charter)
Nevada 80-0433114
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
7777 West Glades Road, Suite 100
Boca Raton, FL 33434 (561) 210-5349
(Address of Principal Executive Offices)(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
May 23, 2011: Common Stock - 59,200,000
2
PMX COMMUNITIES, INC.
FORM 10-Q
For the quarterly period ended March 31, 2011
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 28
Item 4. Controls and Procedures 29
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 30
Item 1A. Risk Factors 30
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 30
Item 3. Defaults upon Senior Securities 30
Item 4. (Removed and Reserved) 30
Item 5. Other Information 30
Item 6. Exhibits 30
SIGNATURES
3
PMX Communities, Inc. and Subsidiary
Consolidated Balance Sheets
March 31, December 31,
2011 2010
(Unaudited) (Audited)
--------- -----------
Assets
Current assets
Cash and cash equivalents $ 10,761 $ 47,181
Inventory 69,819 92,922
Prepaid expenses 13,738 23,083
Prepaid deposit 83,603 83,603
Security deposits 2,939 2,939
--------- ---------
Total current assets 180,860 249,728
Fixed assets
Property and equipment, net 1,375 1,469
--------- ---------
Other assets
Restricted cash 18,165 40,372
--------- ---------
18,165 40,372
--------- ---------
Total assets $ 200,400 $ 291,569
========= =========
Liabilities and Stockholders' Deficit
Current liabilities
Accounts Payable $ 25,005 $ 81,189
Accrued expenses 17,251 22,221
Notes Payable - Short term 15,960 44,465
Derivative Conversion Liability 250,439 149,599
--------- ---------
Total current liabilities 308,655 297,474
Notes Payable - Long term 329,419 205,086
--------- ---------
Total Liabilities 638,074 502,560
Stockholders' deficit
Common stock, $.0001 par value; authorized
100,000,000 shares; issued and outstanding
59,200,000 shares issued and outstanding 5,920 5,915
Additional paid-in capital 199,965 188,970
Accumulated deficit (643,559) (405,876)
--------- ---------
Total stockholders' deficit (437,674) (210,991)
--------- ---------
Total liabilities and stockholders' deficit $ 200,400 $ 291,569
========= =========
See accompanying notes to unaudited consolidated financial statements.
4
PMX Communities, Inc. and Subsidiary
Consolidated Statement of Operations
For the Three Months Ended March 31, 2011 and 2010
(Unaudited)
Three Months ended
March 31,
2011 2010
---- ----
Net sales $ 157,200 $ -
Cost of sales 159,033 -
---------- ----------
Gross profit (1,833) -
Costs and expenses:
Amortization - 250
Depreciation 94 94
Selling, general and administrative
expenses 154,088 4,714
---------- ----------
154,182 5,058
---------- ----------
Loss from operations (156,015) (5,058)
Other income - -
Interest expense (9,363) (2,561)
---------- ----------
Loss before income taxes (165,378) (7,619)
Income taxes - -
---------- ----------
Net loss (165,378) (7,619)
Beneficial Conversion 72,305 -
---------- ----------
Net loss attributable to
Conversion $ (237,683) $ (7,619)
========== ==========
Basic net loss per share $ (0.00) $ (0.00)
========== ==========
Weighted average shares outstanding
Basic 59,196,667 53,600,000
========== ==========
See accompanying notes to unaudited consolidated financial statements.
5
PMX Communities, Inc. and Subsidiary
Consolidated Statement of Cash Flows
For the Three Months Ended March 31, 2011 and 2010
(Unaudited)
Three Months ended
March 31,
2011 2010
---- ----
Cash flows from operating activities
Net loss $(165,378) $ (7,619)
Adjustments to reconcile net (loss)
to net cash provided by (used in)
operating activities:
Issuance of common stock for services 11,000 -
Depreciation 94 94
Amortization - 250
Change in assets and liabilities
Restricted cash 22,207 -
Inventory 23,103 -
Prepaid expenses 9,345 -
Accounts Payable (56,184) 464
Accrued expenses (4,970) (3,650)
--------- ---------
Net cash used in operating activities (160,783) (10,461)
--------- ---------
Cash flows from investing activities - -
--------- ---------
Net cash provided by investing activities - -
Cash flows from financing activities
Proceeds from notes payable 120,000 8,000
Increase in accrued interest 9,363 2,561
Repayment of notes payable (5,000) -
--------- ---------
Net cash provided by financing activities 124,363 10,561
--------- ---------
Net increase in cash and cash equivalents (36,420) 100
Cash and cash equivalents, beginning of
fiscal year 47,181 212
--------- ---------
Cash and cash equivalents,
end of period $ 10,761 $ 312
========= =========
6
Supplementary information:
Cash paid for:
Interest $ - $ -
========= =========
Income taxes $ - $ -
========= =========
See accompanying notes to unaudited consolidated financial statements.
7
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS
--------------------------------
PMX Communities, Inc. (the Company) "PMX" was organized under the laws
of the State of Nevada on December 29, 2004 under the name Merge II,
Inc. PMX's year end is December 31.
On February 10, 2009, by Unanimous Written Consent, the board of
directors authorized an amendment to its Certificate of Incorporation
to change the name of the corporation to PMX Communities, Inc. PMX
Communities also authorized an amendment to amend the articles of
Incorporation from 25,000,000 to 100,000,000 common shares authorized.
The amendments were filed on June 30, 2009.
On September 28, 2010, the Company formed PMX Gold, LLC, (PMX Gold) a
Florida limited liability company as a wholly owned subsidiary of the
Company to assist with evaluating and pursuing opportunities within the
Gold Mining and Retail Gold Sales Industries.
PMX, (through its wholly owned subsidiary PMX Gold, LLC) focuses on the
development of leveraged opportunities within the Retail Gold Sales and
Gold Mining Industries. We operate from our office at West Boca
Executive Suites, 7777 West Glades Road., Suite 100, Boca Raton, FL
33434.
PMX Communities, Inc. (The Company) was incorporated on December 29,
2004, in Nevada and was in the development stage through September 30,
2010. The quarter ended December 31, 2010 was the quarter during which
the Company was considered an operating company and is no longer in the
development stage.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
Basis of Presentation
The unaudited consolidated financial statements included in this report
have been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission for interim reporting and
include all adjustments (consisting only of normal recurring
adjustments) that are, in the opinion of management, necessary for a
fair presentation. These financial statements have not been audited.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations for interim reporting. The Company believes that the
disclosures contained herein are adequate to make the information
presented not misleading. However, these financial statements should be
read in conjunction with the audited financial statements and notes
thereto included in the Company's Annual Report for the year ended
December 31, 2010, which is included in the Company's Form 10-K for the
8
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
year ended December 31, 2010. The financial data for the interim
periods presented may not necessarily reflect the results to be
anticipated for the complete year ended December 31, 2011.
The accompanying financial statements and notes are prepared in
accordance with accounting principles generally accepted in the United
States of America.
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying financial statements is as
follows:
The accompanying financial statements were prepared assuming that the
Company will continue as a going concern. This basis of accounting
contemplates the recovery of the Company's assets and the satisfaction
of its liabilities in the normal course of operations.
The Company's independent accountants issued a "going concern" opinion
on the Company's December 31, 2010 financial statements, since the
Company has experienced losses from operations in 2010 and 2009. This
matter raises substantial doubt about the Company's ability to continue
as a going concern.
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying financial statements is as
follows:
Cash and Cash equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
Restricted cash
The Company has presented cash on hand associated with funding received
from an investor as restricted cash since the cash must be maintained
in a separate bank account and used only for specified projects (Note
8). This restricted balance is presented as a non-current asset on our
balance sheet.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
9
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Principles of Consolidation
The consolidated financial statements include the accounts of PMX
Communities, Inc. and its wholly-owned subsidiary PMX Gold, LLC as of
September 28, 2010. All significant inter-company transactions have
been eliminated.
Inventories
Inventories are valued at the lower of cost (first-in, first-out) or
market, and include finished goods.
Equipment
Equipment is stated at cost, less accumulated depreciation.
Depreciation is provided using the straight-line method over the
estimated useful life of five years for equipment and seven years for
furniture and fixtures
Common Stock, Common Stock Options
The Company uses the fair value recognition provision of ASC 718,
"Compensation-Stock Compensation," which requires the Company to
expense the cost of employee services received in exchange for an award
of equity instruments based on the grant date fair value of such
instruments. The Company uses the Black-Scholes option pricing model to
calculate the fair value of any equity instruments on the grant date.
The Company also uses the provisions of ASC 505-50, "Equity Based
Payments to Non-Employees," to account for stock-based compensation
awards issued to non-employees for services. Such awards for services
are recorded at either the fair value of the services rendered or the
instruments issued in exchange for such services, whichever is more
readily determinable, using the measurement date guidelines enumerated
in ASC 505-50.
Income Taxes
Under the asset and liability method prescribed under ASC 740, Income
Taxes, The Company uses the liability method of accounting for income
taxes. The liability method measures deferred income taxes by applying
enacted statutory rates in effect at the balance sheet date to the
differences between the tax basis of assets and liabilities and their
reported amounts on the financial statements. The resulting deferred
tax assets or liabilities are adjusted to reflect changes in tax laws
as they occur. A valuation allowance is provided when it is more
likely than not that a deferred tax asset will not be realized.
The Company recognizes the financial statement benefit of an uncertain
tax position only after considering the probability that a tax
authority would sustain the position in an examination. For tax
positions meeting a "more-likely-than-not" threshold, the amount
recognized in the financial statements is the benefit
10
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
expected to be realized upon settlement with the tax authority. For
tax positions not meeting the threshold, no financial statement benefit
is recognized. As of March 31, 2011, the Company has had no uncertain
tax positions. The Company recognizes interest and penalties, if any,
related to uncertain tax positions as general and administrative
expenses. The Company currently has no federal or state tax
examinations nor has it had any federal or state examinations since its
inception. All of the Company's tax years are subject to federal and
state tax examination.
Revenue Recognition
The Company recognizes revenue when it is realized and realizable.
- Price is fixed or determinable; and
- Collectability is reasonably assured
Subject to these criterion, the Company recognizes revenue at the time
of shipment of the relevant merchandise. The Company offers its
individual customers a ten-day warranty if the item is returned with
their receipt and if the seal on the bullion is not broken. The
customer will receive their money back plus or minus the movement in
the price of gold. The Company estimates an allowance for sales returns
based on historical experience with product returns. The Company
closely follows the provisions of ASC 605, Revenue Recognition, which
includes the guidelines of Staff Accounting Bulletin No. 104 as
described above.
Income (loss) Per Common Share
Basic income (loss) per share is calculated using the weighted-average
number of common shares outstanding during each reporting period.
Diluted loss per share includes potentially dilutive securities such as
outstanding options and warrants, using various methods such as the
treasury stock or modified treasury stock method in the determination
of dilutive shares outstanding during each reporting period. Common
equivalent shares are excluded from the computation of net loss per
share since their effect is anti-dilutive.
For the net-loss periods ended March 31, 2011 and 2010, we excluded any
effect of the 1,000,000 and 0, outstanding options, respectively, as
their effect would be anti-dilutive.
Advertising
Advertising costs are charged to operations when incurred. During the
three month periods ended March 31, 2011 and 2010, the Company incurred
$20,135 and $0, respectively in advertising expense.
11
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Reclassifications
Certain prior period balances have been reclassified to conform to the
current year's presentation. These reclassifications had no impact on
previously reported results of operations or stockholders' equity.
Recent Authoritative Accounting Pronouncements
Fair value of Financial Instruments
ASU 2010-06. In January 2010, the FASB issued Accounting Standards
Update ("ASU") No. 2010-06, "Fair Value Measurements and Disclosures
(Topic 820) - Improving Disclosures about Fair Value Measurements"
("ASU 2010-06"). ASU 2010-06 amends ASC Topic 820, "Fair Value
Measurements and Disclosures" ("ASC 820") to require additional
disclosures regarding fair value measurements. Specifically, ASU 2010-
06 requires entities to disclose additional information regarding (i)
the reconciliation of recurring Level 3 measurements about purchases,
sales, issuances and settlements on a gross basis, (ii) the amounts of
significant transfers between Level 1 and Level 2 of the fair value
hierarchy and the reasons for these transfers and (iii) the reasons for
any transfers in or out of Level 3. In addition to these new disclosure
requirements, ASU 2010-06 also amends ASC 820 to further clarify
existing guidance pertaining to the level of disaggregation at which
fair value disclosures should be made and the requirements to disclose
information about the valuation techniques and inputs used in
estimating Level 2 and Level 3 fair value measurements. The update is
effective for interim and annual periods beginning after December 15,
2009, except for the requirement to separately disclose information
about purchases, sales, issuances, and settlements in the
reconciliation of recurring Level 3 measurements on a gross basis which
becomes effective for fiscal years (and interim periods within those
fiscal years) beginning after December 15, 2010, and is not expected to
have a material impact on the Company's results of operations or
financial condition. The Company adopted the first portion of the
updates effective January 1, 2010, with no material impact on the
Company's financial condition, results of operations or cash flows. The
Company does not expect the adoption of the remainder of the update to
have a material impact on the Company's financial condition, results of
operations or cash flows.
The company has adopted all recently issued accounting pronouncements.
The adoption of the accounting pronouncements, including those not yet
effective, is not anticipated to have a material effect on the
financial position or results of operations of the Company.
NOTE 3 - INVENTORY
------------------
The Company maintains a deposit account which is used to purchase
precious metal inventory.
12
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Inventory consists of the following:
March 31, 2011 December 31, 2010
-------------- -----------------
Finished Goods $ 69,819 $ 92,922
----------- ----------
$ 69,819 $ 92,922
=========== ==========
NOTE 4 - PROPERY AND EQUIPMENT
------------------------------
Components of property and equipment are as:
March 31, 2011 December 31, 2010
-------------- -----------------
Office Equipment $ 1,600 $ 1,600
Office Furniture and Fixtures 405 405
Less: Accumulated Depreciation (630) (536)
----------- ----------
Property and Equipment, net $ 1,375 $ 1,469
=========== ==========
Depreciation for the three months ended March 31, 2011 and 2010 was $94
and $94, respectively.
NOTE 5 - PREPAID DEPOSIT
------------------------
In May of 2010, a consultant to PMX identified a Gold Bullion Vending
Machine (GOLD to go(tm) ATM) deployed at the Emirates Palace Hotel in
Dubai. The GOLD to go(tm) ATM vending machine is an unmanned point of sale
unit that dispenses various gold bullion products based on constantly
updated real time market pricing information. The machine was being
marketed and deployed by a German Company, Ex Oriente Lux, AG (EOL).
On September 2, 2010, the Company entered into a preliminary agreement
with Ex Oriente Lux to conduct exclusive test marketing of the GOLD to
go(tm) ATM vending machine in the state of Florida. Subsequent to the
signing of the agreement, the Company paid a non-refundable deposit of
10,000 Euros ($13,209 US) to EOL to be applied to the first vending
machine(s) to be ordered by the Company. In December 2010 the Company
paid an additional $70,394 to EOL as a deposit for the first machine.
Accordingly, the Company proceeded with the goal of setting up a test
marketing of one of the units at the Town Center Mall in Boca Raton, FL
for launch on Friday December 17, 2010 the Company commenced retail
sales of gold bullion via the vending machine at the Town Center Mall
in Boca Raton, FL. The Company's active test marketing of the Gold to
Go machine ceased on or about February 28, 2011. During the month of
March the machine was unattended but remained intermittently
operational until it was taken off-line permanently March 23, 2011.
13
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2011 December 31, 2010
-------------- -----------------
Prepaid deposit $ 83,603 $ 83,603
---------- ----------
$ 83,603 $ 83,603
========== ==========
NOTE 6 - RESTRICTED CASH
------------------------
The Company had restricted cash of $18,165 and $40,372 at March 31,
2011 and December 31, 2010 respectively, which represents funds that
are restricted for use that are not available for use in the Company's
normal operations." On November 12, 2010, the Company entered into a
promissory note with one investor for the principal sum of one hundred
twenty five thousand dollars ($125,000). The funds represented by this
note are to be maintained in a segregated account by the Company and
can only be used for the purchase of Gold Bullion Products for the
Company's Gold-to-go vending machine test marketing program. When any
Gold products are sold the funds will be re-deposited into said account
for further inventory purchases (less any gross profits which will be
credited to the Company's general operating account). The Company
intends to use offsetting margins to protect against market losses, but
in the event of any market losses or shortfall the Company would be
responsible to reimburse the note holder for any losses. In the event
the Gold Vending Sales Program is terminated then the funds would be
repaid to the note holder when any remaining gold bullion products
would be sold to wholesalers. (Note 8)
NOTE 7 - ACCRUED EXPENSES
-------------------------
Accrued expenses represent expenses that apply to the reported period
and have not been billed by the provider or paid by the Company.
Accrued expenses consisted of the following:
March 31, 2011 December 31, 2010
-------------- -----------------
Accrued professional fees $ 8,630 $ 8,630
Sales Tax payable 8,621 4,576
-------- --------
$ 17,251 $ 17,251
======== ========
14
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 8 - NOTES PAYABLE
----------------------
During the year December 31, 2009, the Company entered into promissory
notes with six investors who are also shareholders of the company for
the sum of one hundred and twenty-five thousand dollars ($125,000). The
entire amount with eight percent (8%) interest per annum is due two
years (720 days) from date of issue. In the event that the Company
elects to prepay the Company will be obligated to pay a minimum of one
(1) years interest. At the option of the holder , any prepayment of
principal plus interest may be in the form of cash or common stock of
the Company at a discounted price of fifty (50%) percent of the average
closing bid of the stock on the preceding 30 days of trading.
If the Company does not prepay the notes in its entirety, the holder
will have the option to convert the debt due from these notes into
common stock of the Company according to the following:
i) after 180 days the holder may elect to convert 25% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
ii) after 360 days the holder may elect to convert 50% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iii) after 540 days the holder may elect to convert 75% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iv) after 720 days the holder may elect to convert any remaining
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
On June 28, 2009, the Company entered into an assignment and lease
assumption with AU Spectators, LLC.(AU). On February 14, 2009 the
Company had entered into a Lease Purchase Option Agreement with Western
Sierra Mining Corporation, for which the Company paid to Western Seirra
Mining Corporation a deposit of twenty-five thousand ($25,000) dollars.
Under the agreement with AU the Company agrees to assign all rights and
obligations of the Company under the lease; and each of the members of
AU have extended loans to the Company represented by promissory notes.
In consideration for the agreement, each of the members of AU have
agreed to collectively forgive the repayment of the sum of thirty-
thousand ($30,000) dollars of the notes. The assignment and assumption
is effective as of June 30, 2009. The Company has recognized five
thousand ($5,000) in income on the gain on this transaction.
During the year December 31, 2009, the Company entered into a
promissory note with one investor for the sum of twenty-five thousand
dollars ($25,000). The entire amount with ten percent (10%) interest
15
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
per annum is due two years (720 days) from date of issue. In the event
that the Company elects to prepay, the Company must pay a minimum of
six months interest.
The Company has subsequently modified the terms of this note to allow
the holder the option to convert the debt due from this note into
common stock of the Company, according to the following in exchange for
lowering the stated rate from ten percent (10%) interest per annum to
eight percent (8%) interest per annum. All terms and conditions will
apply retroactive to the date of the original note. In the event that
the Company elects to prepay the Company will be obligated to pay a
minimum of one year interest. At the option of the note holder , any
prepayment of principal plus interest may be in the form of cash or
common stock of the Company at a discounted price of fifty (50%)
percent of the average closing bid price of the stock on the preceding
30 days trading.
If the Company does not prepay the note in its entirety, the holder
will have the option to convert the debt due from these notes into
common stock of the Company according to the following:
i) after 180 days the holder may elect to convert 25% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
ii) after 360 days the holder may elect to convert 50% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iii) after 540 days the holder may elect to convert 75% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iv) after 720 days the holder may elect to convert any remaining
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
During the year December 31, 2010, the Company entered into promissory
notes with two investors who are also shareholders of the Company for
the sum of three thousand dollars ($3,000). The entire amount with ten
percent (10%) interest per annum is due one year (360 days) from date
of issue. In the event that the Company elects to prepay the Company
will be obligated to pay a minimum of six months interest.
During the year December 31, 2010, the Company entered into two
promissory notes with one investor who is also a shareholder of the
company for the sum of ten thousand dollars ($10,000). The entire
16
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
amount with ten percent (10%) interest per annum is due two years (720
days) from date of issue. In the event that the Company elects to
prepay the Company will be obligated to pay a minimum of six months
interest.
The Company has subsequently modified the terms of this note to allow
the holder the option to convert the debt due from this note into
common stock of the Company, according to the following schedule and
terms in exchange for lowering the stated rate from ten percent (10%)
interest per annum to eight percent (8%) interest per annum. All terms
and conditions will apply retroactive to the date of the original note.
In the event that the Company elects to prepay the Company will be
obligated to pay a minimum of one year interest.. At the option of the
note holder , any prepayment of said principal plus interest may be in
the form of cash or common stock of the Company at a discounted price
of fifty (50%) percent of the average closing bid price of the stock on
the preceding 30 days trading.
If the Company does not prepay the note in its entirety, the holder
will have the option to convert the debt due from these notes into
common stock of the Company according to the following:
i) after 180 days the holder may elect to convert 25% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
ii) after 360 days the holder may elect to convert 50% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iii) after 540 days the holder may elect to convert 75% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iv) after 720 days the holder may elect to convert any remaining
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
During the year December 31, 2010, the Company entered into a
promissory note with one investor for the sum of ten thousand dollars
($10,000). The entire amount with ten percent (10%) interest per annum
is due two years (720 days) from date of issue. In the event that the
Company elects to prepay, the Company will be obligated to pay a
minimum of six months interest.
The Company has subsequently modified the terms of this note to allow
the holder the option to convert the debt due from this note into
common stock of the Company, according to the following schedule and
17
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
terms in exchange for lowering the stated rate from ten percent (10%)
interest per annum to eight percent (8%) interest per annum. All terms
and conditions will apply retroactive to the date of the original note.
In the event that the Company elects to prepay this note, the Company
will be obligated to pay a minimum of one year interest. At the option
of the note holder , any prepayment of said principal plus interest may
be in the form of cash or common stock of the Company at a discounted
price of fifty (50%) percent of the average closing bid price of the
stock on the preceding 30 days trading.
If the Company does not prepay the note in its entirety, the holder
will have the option to convert the debt due from these notes into
common stock of the Company according to the following:
i) after 180 days the holder may elect to convert 25% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
ii) after 360 days the holder may elect to convert 50% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iii) after 540 days the holder may elect to convert 75% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iv) after 720 days the holder may elect to convert any remaining
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
During the year December 31, 2010, the Company entered into a
promissory note with one investor for the sum of twenty-five thousand
dollars ($25,000). The entire amount with ten percent (10%) interest
per annum is due two years (720 days) from date of issue. In the event
that the Company elects to prepay the Company will be obligated to pay
a minimum of one (1) years interest. At the option of the holder , any
prepayment of principal plus interest may be in the form of cash or
common stock of the Company at a discounted price of fifty (50%)
percent of the average closing bid of the stock on the preceding 30
days of trading.
If the Company does not prepay the notes in its entirety, the holder
will have the option to convert the debt due from these notes into
common stock of the Company according to the following:
i) after 180 days the holder may elect to convert 25% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
18
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
ii) after 360 days the holder may elect to convert 50% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iii) after 540 days the holder may elect to convert 75% of the
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
iv) after 720 days the holder may elect to convert any remaining
principal plus accrued interest into common stock of the Company at a
discounted price of fifty (50%) percent of the average closing bid of
the stock on the preceding 30 days of trading.
During the year ended December 31, 2010, the Company entered into a
three promissory notes with two investors who also shareholders of the
company for the sum of twenty-seven thousand dollars ($27,000). The
entire amount with ten percent (10%) interest is due two years (720
days) from date of issue. In the event that the Company elects to
prepay this note, the Company will be obligated to pay a minimum of six
months interest.
During the year ended December 31, 2010, the Company entered into three
promissory notes with one investor for the sum of seventeen thousand
five hundred dollars ($17,500). The entire amount with ten percent
(10%) interest is due two years (720 days) from date of issue. In the
event that the Company elects to prepay this note, the Company will be
obligated to pay a minimum of six months interest.
During the year ended December 31, 2010, the Company entered into a
promissory note with one investor for the sum of one hundred twenty-
five thousand dollars ($125,000). The entire amount with ten percent
(10%) interest per annum is due two years (720 days) from date of
issue. In the event that the Company elects to prepay, the Company
will be obligated to pay a minimum of six months interest. The funds
represented by this note are to be maintained in a segregated account
by the Company and can only be used for the purchase of Gold Bullion
Products for the Company's Gold-to-go vending machine test marketing
program. When any Gold products are sold the funds will be re-deposited
into said account for further inventory purchases (less any gross
profits which will be credited to the Company's general operating
account). The Company intends to use offsetting margins to protect
against market losses, but in the event of any market losses or
shortfall the Company would be responsible to reimburse the note holder
for any losses. In the event the Gold Vending Sales Program is
terminated then the funds would be repaid to the note holder when any
remaining gold bullion products would be sold to wholesalers. (Note 5)
During the quarter ended March 31, 2011, the Company entered into three
promissory notes with two investors who also shareholders of the
Company for the sum of twenty thousand dollars ($20,000). The entire
amount with ten percent (10%) interest is due two years (720 days) from
19
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
date of issue. The Company repaid five thousand dollars ($5,000) to
one investor during the period. In the event that the Company elects to
prepay this note, the Company will be obligated to pay a minimum of six
months interest.
During the quarter ended March 31, 2011, the Company entered into five
promissory notes with five investors (one who are also a shareholder of
the company) for the sum of one hundred thousand dollars ($100,000).
The entire amount with ten percent (10%) interest per annum is due two
years (720 days) from date of issue. In the event that the Company
elects to prepay the Company will be obligated to pay a minimum of one
(1) years interest. At the option of the holder, any prepayment of
principal plus interest may be in the form of cash or restricted common
stock of the Company at a discounted price of eighty (80%) percent of
the average closing bid of the stock on the preceding 30 days of
trading, but not less the $0.15 per share, or $0.25 per share, and not
to exceed such $0.25 per share amount.
If the Company does not prepay the notes in its entirety, the holder
will have the option to convert the debt due from these notes into
common stock of the Company according to the following:
i) after 180 days the holder may elect to convert 25% of the
principal plus accrued interest into common stock of the Company at a
discounted price of eighty (80%) percent of the average closing bid of
the stock on the preceding 30 days of trading but not less the $0.15
per share, or $0.25 per share, and not to exceed such $0.25 per share
amount.
ii) after 360 days the holder may elect to convert 50% of the
principal plus accrued interest into common stock of the Company at a
discounted price of eighty (80%) percent of the average closing bid of
the stock on the preceding 30 days of trading but not less the $0.15
per share, or $0.25 per share, and not to exceed such $0.25 per share
amount.
iii) after 540 days the holder may elect to convert 75% of the
principal plus accrued interest into common stock of the Company at a
discounted price of eighty (80%) percent of the average closing bid of
the stock on the preceding 30 days of trading but not less the $0.15
per share, or $0.25 per share, and not to exceed such $0.25 per share
amount.
iv) after 720 days the holder may elect to convert any remaining
principal plus accrued interest into common stock of the Company at a
discounted price of eighty (80%) percent of the average closing bid of
the stock on the preceding 30 days of trading but not less the $0.15
per share, or $0.25 per share, and not to exceed such $0.25 per share
amount.
At March 31, 2011 and December 31, 2010 the Company has accrued
interest on the notes of $33,750 and $24,387, respectively.
20
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Promissory notes payable consists of the following:
Opening balance at January 1, 2009 $ -
Principal contributed 150,000
Add: Accrued interest 7,647
Less: Repayment under lease assumption (30,000)
----------
Balance at December 31, 2009 $ 127,647
----------
Principal contributed 217,500
Add: Accrued interest 16,740
Less: effect of conversion (112,336)
----------
Balance at December 31, 2010 $ 249,551
----------
Principal contributed 120,000
Less: Repayment of principal (5,000)
Add: Accrued interest 9,363
Less: effect of conversion (28,535)
----------
Balance at March 31, 2011 $ 345,379
==========
Future maturities of notes payable are as follows:
Year ending
December 31, 2011
-----------------
2011 $ 15,960
2012 212,687
2013 116,732
2014 -
2015 -
---------
Total $ 345,379
=========
At March 31, 2011, the Company had 16 notes outstanding that were
indexed to the Company's common stock. The beneficial conversion of
that stock has resulted in a liability to our holders for $250,439.
At December 31, 2010, the Company had 14 notes outstanding that were
indexed to the Company's common stock. The beneficial conversion of
that stock has resulted in a liability to our holders for $149,599.
NOTE 9 - EQUITY TRANSACTIONS
Common Stock
------------
On February 23, 2010, the Company entered into an agreement to issue
stock options to purchase 1,000,000 common shares to Mr. McCauley, a
director at $.25 per common share
21
PMX COMMUNITIES, INC.
March 31, 2011 and 2010
NOTES TO UNAUDITED FINANCIAL STATEMENTS
On August 18, 2010, the registrant sold 2,750,000 restricted common
shares to ALEH Investments, LLC, a sophisticated investor at $.0375 per
common share for a total of $103,125. The registrant granted the
investor piggyback registration rights whereby the registrant will
include the investor's common shares in any public offering the
registrant conducts. The registrant will bear all costs of the
registration of investor's common shares.
On November 12, 2010, the registrant sold 2,750,000 restricted common
shares in a private placement at $.0375 per common share for a total of
$103,125. The registrant granted the investor piggyback registration
rights whereby the registrant will include the investor's common shares
in any public offering the registrant conducts. The registrant will
bear all costs of the registration of investor's common shares.
On December 6, 2010, the Company issued 50,000 shares of common stock
in exchange for services rendered to a consultant at $0.06 per share,
for a total of $3,000.
On January 6, 2011, the Company issued 50,000 shares of common stock in
exchange for services rendered to a consultant at $0.22 per share, for
a total of $11,000.
For the three month periods ended March 31, 2011 and 2010, the Company
recorded stock-based compensation expense of $0 and $0 respectively.
NOTE 10 - RELATED PARTY
-----------------------
During the three month period ended March 31, 2011, the Company entered
into promissory notes with four investors who are also shareholders of
the Company for the principal sum of sixty thousand dollars ($60,000).
The Company repaid five thousand dollars ($5,000) to one investor
during the period (Note 8).
During the three month period ended March 31, 2010, the Company entered
into promissory notes with three investors who are also shareholders of
the company for the principal sum of eight thousand dollars ($8,000)
(Note 8).
On February 23, 2010, we entered into an agreement pursuant to which we
issued stock options to purchase 1,000,000 common shares to Mr.
McCauley, a director at $.25 per common share.
NOTE 11 - INCOME TAXES
---------------------
For income tax purposes, the Company has elected to capitalize start-up
costs incurred during the period from December 29, 2004 (inception)
through March 31, 2011 totaling $657,739. The start-up costs are being
amortized over sixty months beginning in the year of initial
operations.
22
NOTE 12 - NET LOSS PER SHARE
----------------------------
Basic loss per common share has been calculated based on the weighted
average number of shares outstanding during the period after giving
retroactive effect to stock splits. There are no dilutive securities at
March 31, 2011 and 2010 for purposes of computing fully diluted
earnings per share.
The following reconciles amounts reported in the financial statements:
Three Month Period ended Three Month Period ended
March 31, 2011 March 31, 2010
---------------------- ----------------------
Net loss ($237,683) ($7,619)
======== =======
Denominator for basic
loss per share - -
Basic Weighted average
shares 59,196,667 53,600,000
Basic loss per common
share $ (.00) $ (.00)
========== ==========
NOTE 13 - GOING CONCERN
-----------------------
As reflected in the accompanying financial statements, the Company had
a net loss for the three month period ended March 31, 2011 of $237,683.
At March 31, 2011, the Company has $157,200 in operating revenues. The
ability of the Company to continue as a going concern is dependent on
the Company's ability to further implement its business plan and raise
capital. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
NOTE 14 - SUBSEQUENT EVENTS
----------------------------
The Company has evaluated subsequent events pursuant to ASC Topic 855.
Subsequent to March 31, 2011 through May 23, 2011, the Company entered
into three promissory notes with two investors for the sum of twenty
thousand dollars ($20,000). The entire amount with ten percent (10%)
interest per annum is due two years (720 days) from date of issue. In
the event that the Company elects to prepay this note the Company will
be obligated to pay a minimum of six months interest to the holder of
this note. Other than the disclosures shown, the Company did not
identify any events or transactions that should be recognized or
disclosed in the accompanying financial statements.
23
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Forward Looking Information
The following discussion and analysis of the Company's financial
condition and results of operations should be read with the condensed
financial statements and related notes contained in this quarterly
report on Form 10-Q. All statements other than statements of historical
fact included in this Form 10-Q are, or may be deemed to be, forward-
looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements involve known and unknown risks, uncertainties and
other factors that may cause the Company's actual results, levels of
activity, performance or achievements to be materially different than
any expressed or implied by these forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "continue," or the
negative of these terms or other comparable terminology. Important
factors that could cause actual results to differ materially from those
discussed in such forward-looking statements include: 1. General
economic factors including, but not limited to, changes in interest
rates and trends in disposable income; 2. Information and technological
advances; 3. Cost of products sold; 4. Competition; and 5. Success of
marketing, advertising and promotional campaigns. The Company is
subject to specific risks and uncertainties related to its business
model, strategies, markets and legal and regulatory environment. You
should carefully review the risks described in this Form 10-Q and in
other documents the Company files from time to time with the SEC. You
are cautioned not to place undue reliance on the forward-looking
statements, which speak only as of the date of this Form 10-Q. The
Company undertakes no obligation to publicly release any revisions to
the forward-looking statements to reflect events or circumstances after
the date of this document.
Trends and Uncertainties
Our business is centered on essentially one commodity, gold. Our
operations are currently focused on the demand for physical gold
ownership by retail investors. Our expansion plans are based on
developing and offering a managed gold account and related products to
retail customers and investors. Any decrease in demand for gold or gold
investments could materially adversely affect our revenues,
profitability and general business prospects.
Demand for our products is affected by several factors including:
- Large sales by the official sector. A significant portion of the
aggregate world gold holdings is owned by governments, central banks
and related institutions.
- A significant increase in gold hedging activity by gold
producers. Should there be an increase in the level of hedge activity
of gold producing companies, it could cause a decline in world gold
prices.
24
- A significant change in the attitude of speculators and investors
towards gold. Should the speculative community take a negative view
towards gold, it could cause a decline in world gold prices
Results of Operations
For the three month period ended March 31, 2011, the registrant
received $157,200 in revenue. Cost of goods sold was $159,033. Gross
profit was ($1,833). Selling, general and administrative expenses were
$154,088 and consisted of primarily of accounting fees of $4,700, legal
fees of $21,227, rent expenses of $10,049, wage expenses of $33,297,
consulting fees of $30,000 for the hiring of an outside consultant to
facilitate new business ventures, stock transfer fee of $3,172,
promotion and advertising expenses of $23,135 and other miscellaneous
expenses of $8,543.
For the three months ended March 30, 2010, we did not receive any
revenue. Selling, general and administrative expenses were $4,714 and
consisted of primarily of accounting fees of $1,310, rent expenses of
$2,141, wage expenses of $400 and other miscellaneous expenses of $863.
Interest expense for the three months ended March 31, 2011 was $9,363
an increase of $6,802 from interest expense of $2,561 for the three
month period ended March 31, 2010. The increase was due to the interest
on the notes payable.
For the three month period ended March 31, 2011, we had a net loss of
($165,378) an increase of $157,759 from net loss for the three month
period ended March 31, 2010 of ($7,619) due to the factors above.
Liquidity and Capital Resources
As at March 31, 2011, we had cash and cash equivalents of $10,761.
For the three month period ended March 31, 2011, the registrant
received proceeds from notes payable of $120,000 and had an increase in
accrued interest of $9,363. The registrant repaid $5,000 to one note
holder. As a result, the registrant had net cash provided by financing
activities of $124,363 for the three month period ended March 31, 2011.
Comparatively, the registrant for the three month period ended March
31, 2010, received proceeds from notes payable of $8,000 and had an
increase in accrued interest of $2,561. As a result, the registrant had
net cash provided by financing activities of $10,561 for the three
month period ended March 31, 2010.
Plan of Operation
Our internal and external sources of liquidity have included proceeds
raised from subscription agreements and private placements and advances
from related parties. Our capital strategy is to increase our cash
balance through financing transactions, including the issuance of debt
and/or equity securities.
25
To the extent that funds generated from operations and any private
placements, public offerings and/or bank financing are insufficient,
the registrant will have to raise additional working capital. No
assurance can be given that additional financing will be available, or
if available, will be on terms acceptable to the registrant
The registrant believes the following milestones need to be met to
successfully complete its business plan.
Milestones
1. Item: Import simple gold bullion vending machine to perform test
marketing and gauge US public acceptance of accessing gold bullion
products from an unmanned terminal. Establish agreement with suppliers,
hedging transaction facilitators and other required sources. Obtain
gold bullion inventory and open hedging account; initiate retail gold
sales.
Cost: Approximately $280,000-$300,000 (including inventory and
hedging deposits)
Status: Completed
2. Item: Develop preliminary business plan and design infrastructure
to operate PMX Gold Bullion Account. Secure agreement with technology
partner to develop the technology necessary for operation of the PMX
Gold ATM terminals. Secure project management services from engineering
and manufacturing company to oversee full development of PMX Gold ATM
terminals and network.
26
Status: The registrant has entered into a preliminary agreement to
have the technology developed for operation of the PMX Gold ATM
terminals. Formal project management services proposal from
engineering and manufacturing company to oversee development of PMX
Gold ATM terminals and network expected to be completed shortly
Down payment has been paid to technology partner. Formal licensing and
management services agreement between the registrant and technology
partner in progress and expected to be completed within 2 months.
3. Item: Establish relationship with ATM manufacturer and develop
contract for acquisition of international banking system compliant
hardware and software to interface with gold bullion delivery mechanism
to be developed by technology partner. Develop specifications and
requirements for prototypes to be built and software to run network.
Secure defined costs for project development, software design and
supply, initial prototype manufacture, 2 or 3 second stage prototype
models for field testing and eventual rollout of 25-30 PMX Gold ATM
terminals for initial market deployment.
Cost: Costs for initial design of stage 1 and 2 prototypes, system
software and consulting services presently unknown but estimated to be
substantial. Costs are to be finalized within next 30 days.
Status: Currently have signed NDA with one substantial International
ATM manufacturer and proceeding with detailed specs and requirements
for each item. If proposed schedule is fulfilled and financing obtained
then initial prototype should be manufactured within 3 months, second
stage models of prototype models approximately 2 months later. At that
time final unit costs will be known; estimated at $25,000 - $30,000,
not including initial design, testing, software and consulting costs.
4. Item: Construct website to offer initial PMX Gold Bullion Account
product sales and services. Obtain merchant services approval for
acceptance of debit/credit cards. Offer gold bullion products for sale
via internet. Negotiate agreement with supplier for product supply,
back office support and infrastructure.
Cost: Approximately $25,000 plus agreement to use product supplier
for PMX Gold's inventory requirements.
Status: Currently in development, approximately 60-90 days from
completion.
5. Item: Expand PMX Gold Bullion Account services to include PMX Gold
debit card. Negotiate agreement with debit card provider for branded
debit card. Offer gold bullion products for sale via internet.
Negotiate agreement with debit card provider supplier for back office
support, service platform and infrastructure.
Cost: Initial cost of approximately $30,000.00 includes first
10,000 branded card order plus starting deposit with issuing bank.
27
Status: Have received detailed proposal from substantial debit card
provider(s); awaiting final proposal. Approximately 90 days required
from signing of agreement until network can be active and debit cards
in use.
6. Item: Manufacture first 25-30 machines and complete development of
network to service PMX Gold Bullion Account. Potentially obtain
agreement with financial institution to cobrand ATM.
Cost: Currently estimated at approximately $25,000-$30,000 per
unit, subject to final options.
Status: All steps above must be completed. Approximate timeline to
rollout of machines to populate and support full scale launch of PMX
Gold Bullion Network is estimated to be prior to end of calendar year
2011.
7. Item: Bring on additional board of directors members, advisors and
consultants to assist with development of Retail Gold Sales/PMX Gold
ATM Terminal network and Mining Lease- Purchase Option trading.
Cost: Directors, advisors and consultants have been identified
that will provide services in exchange for equity in the registrant.
Status: One new accounting professional identified to serve on board of
directors, more under consideration. Additional advisors and
consultants with substantial experience in metals and forex trading
identified as well. The registrant expects to add a minimum of three
individuals within 30-60 days.
8. Item: Review properties for precious metals and mining exploration
and development through joint venture with Goldex Capital or others.
Cost: Projects for participation/acquisition present range from
approximately $25,000 to in excess of $5,000,000.
Status: The registrant is currently reviewing multiple projects with
the assistance of Mervyn Gervis, vice president and director of the
registrant and various consultants and potential project partners. The
first project expected to be presented to Goldex Capital within 30-60
days; other partners under consideration as well.
Milestone 1 has been accomplished.
Milestones 2 and 3 are currently in progress.
Milestone 4 can be completed independent of all other milestones.
Milestone 5 is dependent on milestone 4 but can be worked on at same
time.
Milestone 6 is dependent on milestones 2-3 being completed first, and
would work best with items 4-5 being completed by time item 6 ready to
launch. However, items 4-5 not totally necessary for milestone 6 to be
accomplished.
Milestones 7 and 8 are independent of all others.
28
Going Concern
The registrant has incurred net losses for the three month period ended
March 31, 2011 of $237,683. Because of these losses, the registrant
will require additional working capital to develop its business
operations.
Off-Balance Sheet Arrangements
The registrant had no material off-balance sheet arrangements as of
March 31, 2011.
Critical Accounting Policies and Estimates
Management's discussion and analysis of its financial condition and
results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with U.S. generally
accepted accounting principles. The preparation of these financial
statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. On an on-going
basis, we evaluate our estimates, including those related to the
reported amounts of revenues and expenses and the valuation of our
assets and contingencies. We believe our estimates and assumptions to
be reasonable under the circumstances. However, actual results could
differ from those estimates under different assumptions or conditions.
Our financial statements are based on the assumption that we will
continue as a going concern. If we are unable to continue as a going
concern we would experience additional losses from the write-down of
assets.
The registrant uses the fair value recognition provision of ASC 718,
"Compensation-Stock Compensation," which requires the registrant to
expense the cost of employee services received in exchange for an award
of equity instruments based on the grant date fair value of such
instruments. The registrant uses the Black-Scholes option pricing model
to calculate the fair value of any equity instruments on the grant
date.
The registrant also uses the provisions of ASC 505-50, "Equity Based
Payments to Non-Employees," to account for stock-based compensation
awards issued to non-employees for services. Such awards for services
are recorded at either the fair value of the services rendered or the
instruments issued in exchange for such services, whichever is more
readily determinable, using the measurement date guidelines enumerated
in ASC 505-50.
New Accounting Pronouncements
The registrant has adopted all recently issued accounting
pronouncements. The adoption of the accounting pronouncements,
including those not yet effective, is not anticipated to have a
material effect on the financial position or results of operations of
the registrant.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable
29
Item 4. Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act that are designed to
insure that information required to be disclosed in the reports we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the periods specified in the Securities and Exchange
Commission's rules and forms and that such information is accumulated
and communicated to our management, including our chief executive
officer and chief financial officer, or the persons performing similar
functions, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our CEO and CFO, or
the persons performing similar functions, our management has evaluated
the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this annual report. Based on that
evaluation, our CEO and CFO, or the persons performing similar
functions, concluded that our disclosure controls and procedures were
effective as of March 31, 2011.
Evaluation of Changes in Internal Control over Financial Reporting
Under the supervision and with the participation of our CEO and CFO, or
those persons performing similar functions, our management has
evaluated changes in our internal controls over financial reporting
that occurred during the first quarter of 2011. Based on that
evaluation, our CEO and CFO, or those persons performing similar
functions, did not identify any change in our internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
Important Considerations
The effectiveness of our disclosure controls and procedures and our
internal control over financial reporting is subject to various
inherent limitations, including cost limitations, judgments used in
decision making, assumptions about the likelihood of future events, the
soundness of our systems, the possibility of human error, and the risk
of fraud. Moreover, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become
inadequate because of changes in conditions and the risk that the
degree of compliance with policies or procedures may deteriorate over
time. Because of these limitations, there can be no assurance that any
system of disclosure controls and procedures or internal control over
financial reporting will be successful in preventing all errors or
fraud or in making all material information known in a timely manner to
the appropriate levels of management.
30
Part II. Other Information
Item 1. Legal Proceeding
The Company is not a party to, and its property is not the subject of,
any material pending legal proceedings.
Item 2. Unregistered Sales Of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
Item 5. Other Information
None
Item 6. Exhibits
The following documents are filed as a part of this report:
31 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32 Certification pursuant to 18 U.S.C. Section 1350
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PMX COMMUNITIES, INC.
/s/: Michael C. Hiler
---------------------
Michael C. Hiler
Chief Executive Officer
and Chief Financial Officer
Dated: May 23, 2011
