PINX:PMXO Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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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 March 31, 2012


-OR-


[   ]

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 incorporation or organization)

 

(I.R.S. Employer Identification Number)



2200 NW Corporate Boulevard, Suite 220

 

 

Boca Raton, FL 33431

 

(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 (§ 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 [x]             No  [ ]


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.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Rule 12b-2 of the Exchange Act. (Check one):


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, May 15, 2012:

Common Stock – 70,056,053




DOCUMENTS INCORPORATED BY REFERENCE


  None.


2




PMX COMMUNITIES, INC.

FORM 10-Q

INDEX

Page

PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

 

 

 

 

 

    Balance Sheets at March 31, 2012 and December

      31, 2011

 

4

 

 

 

    Statements of Operations for the three months ended March 31, 2012 and 2011

 

5

 

 

 

    Statements of Cash Flows for the three months ended March 31, 2012 and 2011

 

6

 

 

 

Notes to Financial Statements

 

7

 

 

 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

18

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

 

22

Item 4.  Controls and Procedures

 

22


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

 

23

Item 1A. Risk Factors

 

23

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

23

Item 3.  Defaults Upon Senior Securities

 

23

Item 4.  Mine Safety Disclosures

 

23

Item 5.  Other Information

 

23

Item 6.  Exhibits

 

24

 

 

 

SIGNATURES

 

25



3



PMX Communities, Inc. and Subsidiary

Consolidated Balance Sheets

 

March 31,

 

December 31,

 

2012

 

2011

 

(Unaudited)

 

(Audited)

Assets

 

 

 

Current assets

 

 

 

  Cash and cash equivalents

 $6,428

 

 $3,809

  Inventory

 3,184

 

 3,184

  Prepaid expenses

 2,360

 

 913

  Security deposits

 5,439

 

 939

Total current assets

 17,411

 

 8,845

 

 

 

 

Fixed assets

 

 

 

   Property and equipment , net

 63,722

 

 67,992

 

 

 

 

Total assets

 $81,133

 

 $76,837

 

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

Current liabilities

 

 

 

  Accounts Payable

 $59,867

 

 $40,717

  Accrued expenses

 20,590

 

 22,897

  Related party - short-term loan

 5,000

 

 7,500

  Due to stockholder

 -   

 

 2,500

  Notes Payable - Short term

 188,855

 

 94,979

  Derivative Conversion Liability

 90,937

 

 138,828

Total current liabilities

 365,249

 

 307,421

 

 

 

 

Notes Payable - Long term

 13,182

 

 12,861

Total Liabilities

 378,431

 

 320,282

 

 

 

 

Stockholders' deficit

 

 

 

  Common stock, $.0001 par value; authorized 100,000,000

 

 

   shares; issued and outstanding 70,056,053 shares

 7,006

 

 6,993

  Additional paid-in capital

 1,852,323

 

 1,842,337

  Accumulated deficit

 (2,156,627)

 

 (2,092,775)

Total stockholders' deficit

 (297,298)

 

 (243,445)

Total liabilities and stockholders' deficit

 $81,133

 

 $76,837


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, 2012 and 2011

(Unaudited)


 

 

Three Months ended March 31,

 

 

2012

 

2011

 

 

 

 

 

Net sales

 

 $            -   

 

 $157,200

Cost of sales

 

 -   

 

 159,033

Gross profit

 

 -   

 

 (1,833)

 

 

 

 

 

Costs and expenses:

 

 

 

 

  Depreciation

 

 4,270

 

 94

  Selling, general and administrative expenses

 

 74,243

 

 154,088

 

 

 78,513

 

 154,182

Loss from operations

 

 (78,513)

 

 (156,015)

 

 

 

 

 

Other income

 

 -

 

 -

Interest expense

 

 (5,278)

 

 (9,363)

Loss before income taxes

 

 (83,791)

 

 (165,378)

Income taxes  

 

 -

 

 -

Net loss

 

 $(83,791)

 

 $(165,378)

 

 

 

 

 

Beneficial Conversion

 

 (19,939)

 

 72,305

 

 

 

 

 

Net loss attributable to Conversion

 

 $(63,852)

 

 $(237,683)

 

 

 

 

 

Basic net loss per share

 

 $    (0.00)

 

 $      (0.00)

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

  Basic

 

68,614,144

 

59,196,667



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, 2012 and 2011

(Unaudited)

 

 

Three Months ended

 

 

March 31,

 

 

2012

 

2011

Cash flows from operating activities

 

 

 

 

Net loss

 

 $(63,852)

 

 $(237,683)

Adjustments to reconcile net (loss) to net

 

 

 

 

 cash provided by (used in) operating activities:

 

 

 

 

  Issuance of common stock for services

 

 -   

 

 11,000

  Depreciation

 

 4,270

 

 94

  Derivative accretion

 

 (19,939)

 

 72,305

  Change in assets and liabilities

 

 

 

 

    Restricted cash

 

 -

 

 22,207

    Inventory

 

 -

 

 23,103

    Prepaid expenses

 

(1,448)

 

9,345

    Security deposit

 

(4,500)

 

0

    Accounts payable

 

19,149

 

(56,184)

    Accrued expenses

 

 (2,307)

 

 (4,970)

Net cash used in operating activities

 

 (68,627)

 

 (160,783)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

   Proceeds from notes payable

 

 -   

 

 -   

Net cash provided by investing activities

 

 -   

 

 -   

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

  Proceeds from notes payable

 

 60,968

 

 120,000

  Payments on related party - short-term loan

 

 (2,500)

 

 

  Payment made to stockholder

 

 (2,500)

 

 

  Proceeds from stock issuance

 

 10,000

 

 

  Increase in accrued interest

 

 5,278

 

 9,363

  Repayment of notes payable

 

 -   

 

 (5,000)

Net cash provided by  financing activities

 

 71,246

 

 124,363

 

 

 

 

 

Net increase in cash and cash equivalents

 

 2,619

 

 (36,420)

Cash and cash equivalents, beginning of fiscal year

 

 3,809

 

 47,181

Cash and cash equivalents, end of period

 

 $6,428

 

 $10,761

 

 

 

 

 

Supplementary information:

 

 

 

 

  Cash paid for :

 

 

 

 

     Interest

 

 $-   

 

 $-   

     Income taxes

 

 $-   

 

 $-   


See accompanying notes to unaudited consolidated financial statements.


6





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


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, 2200 NW Corporate Boulevard, Suite 220, Boca Raton, FL 33431.


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


7





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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, 2011, which is included in the Company's Form 10-K for the year ended December 31, 2011. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete year ended December 31, 2012.


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, 2011 financial statements, since the Company has experienced losses from operations in 2011 and 2010. 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.


8





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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.


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


9





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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 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


10





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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, 2012 and 2011, we excluded any effect of the 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, 2012 and 2011, the Company incurred $0 and $24,000, respectively in advertising expense.


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)


11





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


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.


 

 

March 31, 2012

 

December 31, 2011

Finished Goods

 

$3,184

 

$3,184

 

 

$3,184

 

$3,184


NOTE 4 – PROPERY AND EQUIPMENT


Components of property and equipment are as:


 

 

March 31, 2012

 

December 31, 2011

Office Equipment

 

$   1,600

 

$    1,600

Machinery and Equipment

 

83,602

 

83,602

Office Furniture and Fixtures

 

405

 

405

Less: Accumulated Depreciation

 

(21,886)

 

(17,615)

Property and Equipment, net

 

$  63,722

 

$  67,992


Depreciation for the three months ended March 31, 2012 and 2011 was $4,270 and $94, respectively.


12





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 5 – 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, 2012

 

December 31, 2011

Accrued professional fees

 

$11,718

 

$14,058

Payroll liabilities

 

251

 

218

Sales tax payable

 

8,621

 

8,621

 

 

$20,590

 

$22,897


NOTE 6 – NOTES PAYABLE


2011 Convertible Notes


During the year ended December 31, 2011, The Company entered into Convertible Promissory Notes (“2011 Convertible Notes”) with 7 investors for the total sum of one hundred and eighty thousand dollars ($180,000). The entire amount with ten percent (10%) interest per annum is due two years from date of issue paid in either Company stock or cash.  In the event that the noteholder elected to convert into stock, the stock would be valued at 20% of the previous 30 trading days’ average closing bid price.  However, the conversion rate would never be less than $0.15 per share.


In 2011, 6 of these notes were converted to common stock at a negotiated rate of $0.08 per share and an equivalent number of “A” Warrants and “B” Warrants (see NOTE 9).


2011 Promissory Notes


During the year ended December 31, 2011, The Company entered into Promissory Notes (“2011 Promissory Notes”) with 7 investors for a total of $64,500.  The entire amount with ten percent (10%) interest per annum is 6 months (180 days) from date of issue.  The 2011 Promissory Notes contain a provision whereby the noteholder can apply the principal and interest due to any other securities offer made by the Company during the term of the note.  Two shareholders exercised this right and converted $36,546 of their 2011 Promissory Notes to common stock, “A” Warrants and “B” Warrants under the same terms as a contemporaneous equity private placement offered by the Company (see NOTE 9).


13





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 6 – NOTES PAYABLE (Continued)


Retirement of Notes


During the year ended December 31, 2011, one 2011 Convertible Note with principal and accrued interest of $21,688 was retired for the amount of $10,000.  As of December 31, 2011, $7,500 was paid.  This transaction resulted in a gain to the company of $11,688 which is reflected in the 2011 Statement of Operations.  The remaining $2,500 was reflected as DUE TO SHAREHOLDER on the 2011 Balance Sheet.


The same investor retired a convertible note issued in 2009 for a total payment of $15,000.  This transaction resulted in a gain to the Company of $15,247 which is reflected in the 2011 Statement of Operations.  The funds to retire this note were borrowed from the majority shareholder, of which $7,500 was reimbursed as of December 31, 2011.  The remaining $7,500 is reflected on the 2011 balance sheet as DUE TO RELATED PARTY. (See Note 10)


Repayment of Notes


In 2011, the Company repaid $64,000 of principal on Promissory Notes issued in 2010 and $13,500 on Promissory Notes issued in 2011.


At December 31, 2011 the Company had accrued interest on the notes of $33,777.


2012 Notes


In 2012, the Company issued 5 Promissory notes with terms similar to the Promissory notes issued in 2011.  This resulted in proceeds of $45,968.


Additionally, 1 Convertible Note was issued for $15,000.  This note is convertible into 3 “Units”. A Unit equates to 100,000 common shares, 100,000 “A” warrants and 100,000 “B” warrants.


Total notes payable consists of the following:


Balance at December 31, 2009

 

$127,647

Principal contributed

 

217,500

Add: Accrued interest

 

16,740

  Less effect of conversion

 

(112,336)

 

 

 

14





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 6 – NOTES PAYABLE (Continued)


Balance at December 31, 2010

 

$249,551

Add: Principal contributed

 

244,500

Accrued interest

 

33,777

Effect of conversion

 

72,716

Less: Principal repaid

 

(77,500)

Accrued interest converted/ retired

 

(34,256)

Principal converted to equity

 

(292,100)

Principal retired

 

(45,000)

 

 

 

Balance at December 31, 2011

 

$151,688

Add: Principal contributed

 

60,968

Accrued Interest

 

5,278

Less effect of conversion

 

15,897

 

 

 

Balance at March 31, 2012

 

202,037


Future maturities of notes payable are as follows:

Year ending December 31, 2011

 

 


2012

 

188,855

2013

 

13,182

2014

 

-

2015

 

-

Total

 

$202,037


At March 31, 2012, the Company had 4 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 $90,937.


15





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 7 - EQUITY TRANSACTIONS


Common Stock

On February 23, 2012 the Company issued 125,000 shares of common stock, 125,000 “A” warrants and 125,000 “B” warrants.  This equity issuance was collectively 1.25 “Units”.


For the three month periods ended March 31, 2012 and 2011, the Company recorded stock-based compensation expense of $0 and $0 respectively.


NOTE 8 - RELATED PARTY


During the three month period ended March 31, 2011, the Company entered into promissory notes with five investors (who are also shareholders of the Company) for the principal sum of sixty thousand nine hundred sixty-eight ($60,968).  


NOTE 9 - 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.



NOTE 10 - 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.


16





PMX COMMUNITIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2012


NOTE 10 - NET LOSS PER SHARE (Continued)


The following reconciles amounts reported in the financial statements:


 

 

Three Month Period ended March 31, 2012

 

Three Month Period ended March 31, 2011

Net loss

 

$    (63,852)

 

$    (237,683)

 

 

 

 

 

Denominator for basic loss per share

 

-

 

-

Basic Weighted average shares

 

70,056,053

 

59,196,667

Basic loss per common share

 

$       (0.00)

 

$        (0.00)


NOTE 11 - GOING CONCERN


As reflected in the accompanying financial statements, the Company had a net loss for the three month period ended March 31, 2012 of $63,852. At March 31, 2011, the Company has $0 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 12 – SUBSEQUENT EVENTS


The Company has evaluated subsequent events pursuant to ASC Topic 855. 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.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Trends and Uncertainties


The registrant is in the process of developing the corporate infrastructure, technology and relationships for the operation of the exclusive unmanned PMX Gold Dispensing Terminals and complementary online gold bullion product sales division.


The registrant has acquired full ownership of intellectual property including two U.S. Provisional Patent Applications and the third and final International Patent Application Number PCT/US2012/020486 (“Unattended Precious Metal Distribution System, Methods and Apparatus”), and is awaiting completion of a proprietary machine to recommence automated gold bullion sales.


Our business operations are currently focused on the demand for essentially one commodity, gold. Specifically, we are addressing the markets of physical gold ownership by retail investors, as well as developing and offering an ancillary set of financial services that would complement the purchase and sale of gold and other precious metals by retail investors. Any decrease in demand for gold or gold investments could materially adversely affect our revenues, profitability and general business prospects.


Proposed expansion plans’ economic success depends upon extensive capital infusion, technology and infrastructure development and market acceptance. Management believes that the current business model of conducting remote retail sales of physical gold products (whether online or via telephone) is extremely limited and one-dimensional. For the most part prices are non-standardized, quality is often not certified, delivery of purchased goods is delayed by days or weeks and there is no sense of client account affiliation between the customer and the entity that either buys gold from or sells gold to the client or customer.


Our expansion plans are based on developing and offering proprietary gold bullion products and services to retail customers and investors. We intend to capitalize on the potential emergence of gold as a parallel currency and offer our clients instant, on-site delivery of their purchases through our network of PMX Gold Dispensing Terminals and complementary on-line sales operations currently under development


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The success of our business model lies in accessing the required capital to develop this gold dispensing terminal network, developing the technology and infrastructure controls and framework necessary to operate the network and cultivating a client base that is receptive to our products and services. There is no guarantee that the capital will be available to the registrant on acceptable terms which would allow for the economic success of the model, that the technology and infrastructure can be successfully developed or that the marketplace will accept our products and services.


The supply and price of gold bullion is subject to volatility and is influenced by numerous factors that are beyond our control; there is no guarantee as to effectiveness of our hedging practices to preserve profits or prevent losses.  We intend to use gold futures and options contracts for the purpose of hedging the effects of changing gold prices on our inventory.


Although the use of hedging may enable us to mitigate the effect of changing prices, no strategy is entirely effective to eliminate the pricing risks and we may remain exposed to losses when prices move significantly in a short period of time, and we generally remain exposed to supply risk in the event of non-performance by the counter-parties to any futures contracts. Our hedging strategy and the hedges that we enter into may not adequately offset the risks of gold volatility and our hedges may result in losses. Failure to properly design and implement an effective hedging strategy may materially adversely affect our business and operating results. In this case, our cost of sales may increase, resulting in a decrease in profitability.


Since we rely heavily on common carriers to ship our gold, any disruption in their services or increase in shipping costs could adversely affect our relationship with our customers, which could result in reduced revenues, increased operating expenses, a loss of customers or reduced profitability. Any significant increase in shipping costs could lower our profit margins or force us to raise prices, which could cause our revenue and profits to suffer.


We depend on our relationships with gold brokers and wholesalers for the supply of our primary product, high quality, certified Credit Suisse and Pamp Suisse gold products.   If any of our relationships with these sources deteriorate, we may be unable to procure a sufficient quantity of these high-quality gold at prices acceptable to us or at all.   In such case, we may not be able to fulfill the demand of our existing customers, supply new customers or expand other channels of distribution


We face foreign exchange rate exposure as we intend to allow for our products to be bought and sold in multiple currencies. To the extent that we are unable to unsuccessfully hedge any exposure that we face in these transactions we could suffer financial losses.


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Results of Operations


Three months ended March 31, 2012 and 2011


For the three months ended March 31, 2012, the registrant reported revenues of $0.  The cost of sales was $0, resulting in a gross profit of $0.  We had depreciation costs of $4,270.  We also had $74,243 in selling, general and administrative expenses.  We had interest expense of $(5,278).   As a result, we had a net loss of $(83,791) for the three months ended March 31, 2012.  Additionally, we had promissory notes outstanding that were indexed to our common stock resulting in a beneficial conversion of that stock of $19,939.  As a result, we had a net loss attributable to conversion of $(63,852) for the three months ended March 31, 2012.


Comparatively, for the three months ended March 31, 2011, the registrant reported revenues of $157,200.  The cost of sales was $159,033, resulting in a gross profit of $(1,833).  We had depreciation costs of $94.  We also had $154,088 in selling, general and administrative expenses.  We had interest expense of $(9,363).  As a result, we had a net loss of $(165,378) for the three months ended March 31, 2011.  Additionally, we had promissory notes outstanding that were indexed to our common stock resulting in a beneficial conversion of that stock of $72,305.  As a result, we had a net loss attributable to conversion of $(237,683) for the three months ended March 31, 2011.


Both the significant decrease in revenues and the associated decrease in selling, general and administrative expenses from March 31, 2011 to the same period in 2012 was due largely to the conclusion of test marketing operations on March 23, 2011 by the registrant.  During this period in 2012, the registrant concentrated on the development of its sales and marketing plan by acquiring full ownership of two U.S. Provisional Patent Applications and an International Patent Application and is awaiting completion of proprietary Gold Dispensing Terminals to re-commence automated gold bullion sales.


Liquidity and Capital Resources


For the three months ended March 31, 2012, the registrant had cash and cash equivalents of $6,428.  We had inventory of $3,184, prepaid expenses of $2,360 and security deposits of $5,439.  For the three months ended March 31, 2012, we had total current assets of $17,411.


For the three months ended March 31, 2012 and 2011, we did not pursue any investing activities.


For the three months ended March 31, 2012 we received proceeds from notes payable of $60,968.  We repaid $2,500 of a related party-short term loan and repaid a shareholder loan of $2,500.  We received $10,000 from the sale of our common stock and had an increase in accrued interest of $5,278.  As a result, we had net cash provided by financing activities of $71,246 for the three months ended March 31, 2012.


20





Comparatively, for the three months ended March 31, 2011, we received proceeds from notes payable of $120,000.  We also an increase in accrued interest of $9,363 and repaid notes payable of $5,000.  As a result, we had net cash provided by financing activities of $124,363 for the three months ended March 31, 2011.


Our internal and external sources of liquidity have included proceeds raised from subscription agreements and private placements and advances from related parties.  We are currently not aware of any trends that are reasonably likely to have a material impact on our liquidity.  We are attempting to increase the sales to raise much needed cash for the fulfillment of the registrant’s business plan.  It is our intent to secure a market share in the retail gold and related financial services market, which we feel will require additional capital over the long term to undertake sales and marketing initiatives, further our research and development, and to manage timing differences in cash flows from the time our PMX Gold Dispensing Terminals are developed and put into use and positive cash flow product is generated.


Our capital strategy is to increase our near and mid term cash balance through financing transactions, including the issuance of debt and/or equity securities. Once our PMX Gold ATM terminal prototypes have been developed and put into the field we intend to work with our accountants and SEC counsel and develop a Pro-Forma financial model based on their results and pursue traditional Wall Street financing.


Going Concern

The registrant has incurred a net loss for the three months ended March 31, 2012 of $(83,791).  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, 2012.


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.


21





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


During the period ended March 31, 2012, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Evaluation of Disclosure Controls and Procedures


Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of March 31, 2012.  Based on this evaluation, our chief executive officer and principal financial officers have concluded such controls and procedures to be effective as of March 31, 2012 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


22





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 smaller reporting companies.


Item 2. Unregistered Sales Of Equity Securities and Use of Proceeds


On February 23, 2012, the Company issued 125,000 shares of common stock, 125,000 “A” warrants and 125,000 “B” warrants.  This equity issuance was collectively 1.25 “Units”.


All of the above common share issuances were made pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933 to sophisticated investors.


Item 3. Defaults Upon Senior Securities


None


Item 4. Mine Safety Disclosures


Not Applicable


Item 5. Other Information


None


23





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.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.


24





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/ Lindsey Perry

Lindsey Perry

Chief Executive Officer

Chief Financial Officer


Dated: May 15, 2012



25




PINX:PMXO Quarterly Report 10-Q Filling

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PINX:PMXO Quarterly Report 10-Q Filing - 3/31/2012
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