Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 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.AND SUBSIDIARY
-----------------------------------
(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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes [ ] No [x]
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 229.405 of this chapter) during the
proceeding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]
2
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer, or a smaller
reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller Reporting Company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
August 18, 2011: Common Stock - 60,850,000
3
Page No.
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 30, 2011
(Unaudited) and December 31, 2010 (Audited) 4
Unaudited Consolidated Statements of Operations -
For the Three Six Months Ended June 30, 2011 and 2010 6
Unaudited Consolidated Statements of Cash Flows -
For the Six Months Ended June 30, 2011 and 2010 7
Notes to unaudited Consolidated Financial Statements 8
Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 23
Item 4. Controls and Procedures 23
Part II. Other Information
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds 25
Item 3. Defaults Upon Senior Securities 25
Item 4. (Removed and Reserved) 25
Item 5. Other Information 25
Item 6. Exhibits 25
4
PMX COMMUNITIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2011 2010
(Unaudited) (Audited)
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 17,297 $ 47,181
Inventory 11,039 92,922
Prepaid expenses 9,279 23,083
Prepaid deposits 83,603 83,603
Security deposits 939 2,939
-------- --------
Total Current Assets 122,157 249,728
Fixed Assets:
Property and equipment, net 1,281 1,469
-------- --------
Other assets:
Construction in progress 39,000 -
Restricted cash 84 40,372
-------- --------
39,084 40,372
-------- --------
Total assets $162,522 $291,569
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts Payable $ 45,760 $ 81,189
Accrued Expenses 12,871 22,221
Notes Payable - Short term 11,463 44,465
Derivative Conversion Liability 236,755 149,599
-------- --------
Total current liabilities 306,849 297,474
Notes Payable - Long term 229,640 205,086
-------- --------
Total Liabilities 536,489 502,560
5
Stockholders' deficit:
Common stock, $.0001 par value;
authorized 100,000,000 shares;
issued and outstanding 60,850,000
shares issued and outstanding 6,085 5,915
Additional paid-in capital 359,800 188,970
Accumulated deficit (739,852) (405,876)
-------- ---------
Total stockholders' deficit (373,967) (210,991)
-------- ---------
Total liabilities and stockholders' deficit $162,522 $291,569
======== ========
See accompanying notes to unaudited consolidated financial statements.
6
PMX COMMUNITIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(UNAUDITED)
Three Months ended Six Months ended
June 30, June 30,
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net sales $ - $ - $ 157,200 $ -
Cost of sales 3,107 - 162,140 -
---------- ---------- ---------- ----------
Gross profit (3,107) - (4,940) -
Costs and expenses:
Amortization - 250 - 500
Depreciation 94 95 188 189
Selling, general and
administrative expenses 115,551 21,736 269,639 26,449
---------- ---------- ---------- ----------
115,645 22,081 269,827 27,138
---------- ---------- ---------- ----------
Loss from operations (118,752) (22,081) (274,767) (27,138)
Other income - - - -
Interest expense (7,401) (2,919) (16,764) (5,480)
---------- ---------- ---------- ----------
Loss before income taxes (126,153) (25,000) (291,531) (32,618)
Income taxes - - - -
---------- ---------- ---------- ----------
Net loss $ (126,153)$ (25,000)$ (291,531)$ (32,618)
---------- ---------- ---------- ----------
Beneficial Conversion (29,860) - 42,445 -
---------- ---------- ---------- ----------
Net loss attributed to conversion (96,293) (25,000) (333,976) (32,618)
========== ========== ========== ==========
Basis net loss per share $ (0.00)$ (0.00)$ (0.01)$ (0.00)
========== ========== ========== ==========
Weighted average shares
outstanding: Basic 59,351,648 53,600,000 59,274,586 53,600,000
========== ========== ========== ==========
See accompanying notes to unaudited consolidated financial statements.
7
PMX COMMUNITIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(UNAUDITED)
Six Months ended
June 30,
2011 2010
--------- --------
Cash flows from operating activities:
Net Loss $(291,531) $(32,618)
Adjustments to reconcile net (loss) to net
cash provided by (used in) operating activities:
Issuance of common stock for services 21,000 -
Depreciation 188 189
Amortization - 500
Change in assets and liabilities
Restricted cash 40,288 -
Inventory 81,883 -
Prepaid expenses 13,804 -
Security deposits 2,000 -
Accounts payable (35,430) 890
Accrued expenses (9,350) (3,550)
--------- --------
Net cash used in operating activities (177,148) (34,589)
--------- --------
Cash flows from investing activities:
Construction in progress (39,000) -
--------- --------
Net cash (used in) investing activities (39,000) -
Cash flows from financing activities:
Proceeds from notes payable 222,000 28,000
Increase in accrued interest 16,764 5,480
Repayment of notes payable (77,500) -
Common stock issued for cash, net of costs 25,000 1,000
--------- --------
Net cash provided by financing activities 186,264 34,480
--------- --------
Net increase in cash and cash equivalents (29,884) (109)
Cash and cash equivalents,
beginning of fiscal year 47,181 212
--------- --------
Cash and cash equivalents, end of period $ 17,297 $ 103
========= ========
Supplementary information
Cash paid for:
Interest $ - $ -
========= ========
Income taxes $ - $ -
========= ========
See accompanying notes to unaudited consolidated financial statements.
8
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED 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. PMX Communities, Inc. 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, having
achieved revenues from the sale of gold bullion from the launch of the
first Gold Bullion Vending Machine in the US by PMX Gold on December 17,
2010.
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.
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.
9
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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
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.
NOTE 3 - INVENTORY
------------------
The Company maintains a deposit account that is used to purchase
precious metal inventory.
Inventory consists of the following:
June 30, 2011 December 31, 2010
------------- -----------------
Finished Goods $ 11,039 $ 92,922
---------- ----------
$ 11,039 $ 92,922
========== ==========
On a continuing basis, inventory quantities on hand are reviewed and an
analysis of the provision for excess and obsolete inventory is performed
based primarily on the Company's sales history and anticipated future
demand.
10
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - CONSTRUCTION IN PROGRESS
---------------------------------
Construction in progress costs were $39,000 and $0, respectively at June
30, 2011 and December 31, 2010. These costs reflect costs to secure
project management services from an engineering and manufacturing
company to oversee full development of PMX Gold ATM terminals and
network according to Company milestones.
NOTE 5 - RESTRICTED CASH
------------------------
The Company had restricted cash of $84 and $40,372 at June 30, 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).
In May 2011 the Company repaid $60,000 of principal on the promissory
note. At June 30, 2011 the balance owed is $73,248 including accrued
interest of $8,248.
NOTE 6 - NOTES PAYABLE
----------------------
During the six month period ended June 30, 2011, The Company entered
into seven promissory notes with three investors who also shareholders
of the company for the sum of forth two thousand dollars ($42,000). The
entire amount with ten percent (10%) interest is due two years (720
days) from date of issue. The Company repaid seventeen thousand five
hundred dollars ($17,500) to two investors 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 six month period ended June 30, 2011, The Company entered
into seven promissory notes with six investors (three who are also
shareholders of the company) for the sum of one hundred eighty thousand
dollars ($180,000). 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 and not
to exceed such $0.25 per share amount.
11
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 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 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 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 and not to exceed such $0.25 per share amount.
In June 2011, the Company entered into a modification and amendment of
convertible promissory note, holder's election and conversion notice and
termination agreement with three note holders. The original notes for
$120,000 were converted into shares of common stock of the Company, at
the agreed upon price of $0.10 (10 cents) per share (1,200,000 shares),
and holders have agreed to waive all accrued interest from the inception
of the note thru the date that the shares are issued.
In June 2011, the Company entered into a modification and amendment of
convertible promissory note, holder's election and conversion notice and
termination agreement with one note holder. The original note for
$10,000 were amended and modified to delete the entire conversion
provisions in the note, and to allow the holder to elect to convert at
any time that the Company notifies holder that it is able and desires to
pay the note in full. The Company expressed their intention to convert
$5,000 of the principal balance due into shares of common stock of the
Company, at the agreed upon price of $0.05 (5 cents) per share (100,000
shares), and holder has agreed to waive all accrued interest from the
inception of the note thru the date that the shares are issued to the
note holders. The convertible promissory note was deemed cancelled and
terminated as of the date the shares were issued.
At June 30, 2011 and December 31, 2010 the Company has accrued interest
on the notes of $41,151 and $24,387, respectively.
12
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED 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 222,000
Less: Repayment of principal (77,500)
Add: Accrued interest 16,764
Loss: Converted to common stock (125,000)
Less: Effect of conversion (44,712)
--------
Balance at June 30, 2011 $241,103
--------
Future maturities of notes payable are as follows:
Year ending
December 31, 2011
-----------------
2011 $ 11,463
2012 137,983
2013 91,657
2014 -
2015 -
--------
Total $241,103
========
At June 30, 2011, 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 $236,755.
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.
13
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - EQUITY TRANSACTIONS
----------------------------
Common Stock
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.
On June 20, 2011, the registrant sold 250,000 restricted common shares
in a private placement at $.10 per common share for a total of $25,000.
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 June 30 2011 the Company issued 100,000 shares of common stock in
exchange for services rendered to a consultant at $0.10 per share, for a
total of $10,000.
For the three and six month periods ended June 30, 2011 and 2010, the
Company recorded stock-based compensation expense of $0 and $0
respectively.
NOTE 8 - RELATED PARTY
----------------------
During the six month period ended June 30, 2011, The Company entered
into promissory notes with four investors who are also shareholders of
the company for the principal sum of sixty two thousand dollars
($62,000), The Company repaid seventy seven thousand five hundred
dollars ($77,500) to three investors during the period (Note 6).
During the six month period ended June 30, 2010, The Company entered
into promissory notes with three investors who are also shareholders of
the company for the principal sum of thirteen thousand dollars ($13,000)
(Note 6).
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 9 - 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
June 30, 2011 and 2010 for purposes of computing fully diluted earnings
per share.
14
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following reconciles amounts reported in the financial statements:
Six month period Six month period
ended ended
June 30, 2011 June 30, 2010
------------- -------------
Net loss $ (333,976) $ (32,618)
========== ==========
Denominator for basic
loss per share -
Basic weighted average shares 59,274,586 53,600,000
Basic loss per common share $ (.01) $ (.00)
========== ==========
NOTE 10 - GOING CONCERN
-----------------------
As reflected in the accompanying financial statements, the Company had a
net loss for the six month period ended June 30, 2011 of $333,976. At
June 30, 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 11 - SUBSEQUENT EVENTS
---------------------------
The Company has evaluated subsequent events pursuant to ASC Topic 855.
On August 4, 2011, the Company entered into a memo of understanding with
Capital Path Securities, LLC to act as the exclusive private placement
agent and syndication manager for an equity offering of the Company's
common stock.
On August 5, 2011, Michael C. Hiler resigned as chief executive officer.
As a result, the Company's board of directors appointed Mark Connell as
chief executive officer and Alfredo Cortellini as chief technology
officer. Additionally, the board of directors appointed Mark Connell
and Alfredo Cortellini as directors to serve until the next shareholder
meeting. The Company approved an employment agreement for the new
officers.
On August 5, 2011, the Company entered into a development agreement with
Gold Deposit Technologies, Inc. to assist in the development and
implementation of the Company's proprietary PMX Gold ATM Terminal and
associated gold bullion based financial services business plan. The plan
includes the structuring and marketing of precious metals accounts for
the use of its clients with potential accessibility via the internet,
the PMX Gold ATM Terminals and co-branded debit cards to be issued by
the Company.
15
PMX COMMUNITIES, INC. AND SUBSIDIARY
June 30, 2011 and 2010
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
On August 5, 2011, the Company approved a stock awards plan dated August
5, 2011 authorizing the issuance of an aggregate of 6,000,000 common
shares. The stock awards plan must be approved by the Company's
shareholders within 12 months.
On August 5 2011, the Company approved the registration under the
Securities Act of 1933 of 4,500,000 common shares to be issued under the
stock awards plan.
On August 5, 2011, there was a change in control of the Company as
Michael C. Hiler sold his 33,000,000 common shares to Dickinson Capital,
LLC, an entity controlled by Mark B. Goldstein.
16
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 ("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.
17
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.
- 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
Results of Operations for the three months ended June 30, 2011 and 2010
For the three month period ended June 30, 2011, the registrant did not
receive any revenue. Cost of goods sold was $3,107. Gross profit was
($3,107).
For the three month period ended June 30, 2011, selling, general and
administrative expenses were $115,551 and consisted of primarily of
accounting fees of $4,858, legal fees of $4,988, rent expenses of
$5,094, wage expenses of $18,350, consulting fees of $37,500 for the
hiring of an outside consultant to facilitate new business ventures,
consulting fees of $10,000 for the hiring of outside consultant,
shareholder relations expense of $14,000 for the hiring of an outside
consultant, stock transfer fee of $3,899, media relations expenses of
$950 and other miscellaneous expenses of $15,912.
For the three month period ended June 30, 2010, we did not receive any
revenue. Selling, general and administrative expenses were $21,736 and
consisted of primarily of accounting fees of $1,835, rent expenses of
$2,141, wage expenses of $7,100, stock transfer fees of $10,488 and
other miscellaneous expenses of $172.
Interest expense for the three months ended June 30, 2011 was $7,401 an
increase of $4,482 from interest expense of $2,919 for the three month
period ended June 30, 2010. The increase was due to the interest on the
notes payable.
For the three month period ended June 30, 2011, we had a net loss of
($126,153) an increase of $101,153 from net loss for the three month
period ended June 30, 2010 of ($25,000) due to the factors above.
Results of Operations for the six months ended June 30, 2011 and 2010
For the six month period ended June 30, 2011, the registrant received
$157,200 in revenue. Cost of goods sold was $162,140. Gross profit was
($4,940).
18
For the six month period ended June 30, 2011, selling, general and
administrative expenses were $269,639 and consisted of primarily of
accounting fees of $9,558, legal fees of $26,215, rent expenses of
$15,143, wage expenses of $47,647, consulting fees of $67,500 for the
hiring of an outside consultant to facilitate new business ventures,
consulting fees of $10,000 for the hiring of outside consultant,
shareholder relations expense of $14,000 for the hiring of an outside
consultant, stock transfer fee of $7,071, media relations expenses of
$20,500, promotion and advertising expenses of $17,535 and other
miscellaneous expenses of $34,470.
For the six month period ended June 30, 2010, we did not receive any
revenue. Selling, general and administrative expenses were $26,449 and
consisted of primarily of accounting fees of $3,145, rent expenses of
$4,281, wage expenses of $7,100, stock transfer fee of $10,488 and other
miscellaneous expenses of $1,435.
Interest expense for the six months ended June 30, 2011 was $16,764 an
increase of $11,284 from interest expense of $5,480 for the six month
period ended June 30, 2010. The increase was due to the interest on the
notes payable.
For the six month period ended June 30, 2011, we had a net loss of
($291,531) an increase of $258,913 from net loss for the six month
period ended June 30, 2010 of ($32,618) due to the factors above.
Liquidity and Capital Resources
As at June 30, 2011, we had cash and cash equivalents of $17,297.
For the six month period ended June 30, 2011, the registrant paid
$39,000 for construction in progress. As a result, the Company had net
cash used in investing activities of $39,000.
For the six month period ended June 30, 2011, the registrant received
proceeds from notes payable of $222,000 and had an increase in accrued
interest of $16,764. Additionally, the Company received proceeds of
$25,000 from the sale of common stock. The registrant repaid $77,500 to
three note holders. As a result, the registrant had net cash provided by
financing activities of $186,264 for the six month period ended June 30,
2011.
Comparatively, the registrant for the six month period ended June 30,
2010, received proceeds from notes payable of $28,000 and had an
increase in accrued interest of $5,480. Additionally, for the six months
ended June 30, 2010, the Company received a credit for costs incurred to
file registration statement of $1,000. As a result, the Company had net
cash provided by financing activities of $34,480 for the six months
ended June 30, 2010.
19
Plan of Operation
Our internal and external sources of liquidity have included proceeds
raised from subscription agreements, 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.
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
We are an entrepreneurial company having launched the first gold bullion
vending machine in the United States. We are leveraging our expertise
and know-how in the gold business by developing proprietary technology
and infrastructure to meet retail and institutional demand for gold
investments and gold transactions.
During the period from December 17, 2010 through March 23, 2011, we test
marketed and operated one (1) gold bullion vending machine at the Town
Center at Boca Raton(r), a retail shopping mall located in South Florida,
and vended a total of 699 .999 Pure Credit Suisse Gold Bullion Bars and
American Eagle Gold Coins in cash only sales transactions in the
aggregate amount of $266,256.
As of the date of this filing, we have completed our test marketing and
are currently developing the first American made Gold ATM Terminals.
Rather than attempting to simply vend gold bullion products, our
machines are being designed integrate seamlessly with the International
Banking System and function as part of a gold bullion based financial
services network to capitalize on the emergence of gold as a potential
parallel currency and modern medium of exchange.
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 initiate retail gold sales.
Status: Completed.
Cost: Approximately $280,000-$300,000 including equipment, leases,
inventory and hedging deposits.
20
2. Item: Develop preliminary business plan and design infrastructure
to operate PMX Gold Bullion Account System. Secure project management
services from engineering and manufacturing company to develop gold
dispensing technology and oversee full development and manufacture of
PMX Gold ATM terminals and network.
Status: Omnitech Automation has completed the initial technology design
and development for operation of the physical dispensing units within
the PMX Gold ATM terminals. Formal Project management services agreement
with Omnitech has subsequently been entered into to oversee development
and manufacture of PMX Gold ATM terminals and network.
Costs: Approximately $120,000.00 in costs currently expended between
Omnitech payments and in house expenses.
3. Item: Acquire initial intellectual property rights for foundation of
business method patent and development of technology necessary to run
business. Secure agreement with entity to oversee and consult with PMXO
regarding development of business plan to jointly develop further
intellectual property rights; retain exclusive worldwide rights to both
business plan and methodology as it relates to gold business.
Status: Agreement reached with Gold Deposit Technology (GDT) to acquire
access to previously submitted business method provisional patent and to
jointly develop technology and further intellectual property with
exclusive worldwide rights as it applies to gold and precious metals
being awarded to PMX subject to certain milestones.
Costs: Annual contract budget for first 2 year of approximately
$240,000.00* per year, success bonuses based on ATMs deployed/accounts
under management as well as stock incentives. Annual budget/payments
targeted to increase slightly thereafter but are also cancellable
without financial penalty if business model or value of intellectual
property proves undesirable.
*Approximately 50% of these fees included in Initial Prototype
Manufacture & Gold ATM/Network Development Budget figures.
4. 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 designed and developed by technology partners. Develop
specifications and requirements for prototype to be built and software
to run network. Secure defined costs for project development, software
design and supply, and initial prototype manufacture.
Status: Currently have initial manufacturing plans and engineering
drawings for unique aspects of manufacturing. Have signed NDAs and
engaged in significant talks with ATM manufacturers, Kiosk Designers and
Financial Services Software/ Network Specialists. Initial "First to
Market" manufacturer expected to be confirmed within 2 months. If
proposed schedule is adhered to and financing obtained we should have
prototype design complete within 2 months and Phase I manufacturing
initiated 1 month thereafter.
21
Cost: Costs for initial design, manufacture and debugging of stage 1
prototypes, system software and consulting services estimated at
$800,000. Final ATM cost currently budgeted at $50,000 per unit
(includes nationwide coordinated release and ramp-up of network).
5. Item: Construct website to offer both initial gold bullion products
for sale via Internet as precursor to bundled services via PMX Gold
Bullion Accounts. Obtain merchant services approval for acceptance of
debit/credit cards. Negotiate agreement with supplier for product
supply, back office support and infrastructure.
Cost: Approximately $25-50,000.00; management oversight part of gold
bullion sales is also part of GDT contract.
Status: Currently in development, approximately 30-60 days from
completion.
6. Item: Expand Online Sales to PMX Gold Bullion Account services to
include PMX Gold Debit Card. Negotiate agreement with debit card
provider for branded debit card. Negotiate agreement with debit card
provider supplier for back office support, service platform and
infrastructure.
Cost: Initial cost of approximately $25-50,000.00 includes first
10,000 co-branded card order, starting deposit with issuing bank and
varied level of marketing costs.
Status: Have received detailed proposal from substantial debit card
provider(s); awaiting final proposal(s). Approximately 90 days required
from signing of agreement until network can be active and debit cards in
use.
7. Item: Manufacture, launch and deploy the first wave of machines (6-
30 depending on funding level received) and complete development of
network to integrate PMX Gold Bullion Account features.
Cost: Currently budgeted at line item of $50,000.00 per unit, subject
to final options. Costs/ out-of-pocket cash outlays could be
significantly offset through advertising initiatives or potential
cobranding agreement or leasing/finance arrangements from
manufacturer(s).
Status: All steps above must be completed. Approximate timeline to Phase
I 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.
8. Item: Bring on additional corporate officers, board of directors
members, advisors and consultants to assist with development of
operations and fulfillment of business plan.
Cost: Board members have been engaged to serve in exchange for
restricted stock issuance from Treasury. Officers, employees, advisors
and consultants have been identified that will provide services partly
in exchange for cash and equity.
22
Status: New Company President hired with substantial marketing and
business development experience. Chief Technical Officer with
substantial manufacturing, design and technical background appointed.
Both Officers also serve on Board. Technology Consultants and Advisors
Omnitech Automation, Inc. and Gold Deposit Technologies have been
retained. PMX is currently evaluating several other additions as well.
9. 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 PMX as well
as through various consultants and potential project partners.
Milestones 1, 2 and 3 have been accomplished.
Milestone 4 is in progress.
Milestone 5 and 6 are in progress and can be completed independent of
all other milestones but will help with milestone 7.
Milestone 7 is dependent on milestone 4.
Milestone 8 has been partially fulfilled but is still in progress
Milestone 9 is independent of all others.
Going Concern
The registrant has incurred net losses for the six month period ended
June 30, 2011 of $333,976. 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 June
30, 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.
23
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
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 June 30, 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 quarter ended June 30, 2011. Based on that evaluation, our
CEO and CFO, or those persons performing similar functions, did not
24
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.
25
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 1A. Risk Factors
Not applicable to a smaller reporting company.
Item 2. Unregistered Sales Of Equity Securities and Use of Proceeds
On June 20, 2011, the registrant sold 250,000 restricted common shares
in a private placement at $.10 per common share for a total of $25,000.
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.
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:
Exhibit 31* - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32* - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
101.INS** XBRL Instance Document
101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF** XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** XBRL Taxonomy Extension Label Linkbase Document
101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith
**XBRL (Extensible Business Reporting Language) information is furnished
and not filed or a part of a registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933, as amended,
is deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and otherwise is not subject to
liability under these sections. These exhibits will be filed by
amendment.
26
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/Mark Connell Dated: August 18, 2011
---------------------
Mark Connell
Chief Executive Officer
/s/Michael C. Hiler Dated: August 18, 2011
---------------------
Michael C. Hiler
Chief Financial Officer
