B-Maven, Inc. Form 10-Q Summary
Filing identification: The provided filing is for B-Maven, Inc., not Iqstel Inc. It covers the unaudited quarter ended September 30, 2014, the company’s fiscal first quarter. B-Maven was a development-stage company and reported itself as a shell company. The company develops and markets the E-Scentual natural skincare product line.
Financial position and results
| Metric | Quarter ended September 30, 2014 | Comparable 2013 period |
|---|---|---|
| Revenue | $0 | $3,802 |
| Cost of goods sold | $0 | $421 |
| Gross margin | $0 | $3,381, or 88.9% |
| Total expenses | $10,656 | $13,633 |
| Interest expense | $296 | $35 |
| Net loss | $11,752 | $10,287 |
| Basic and diluted loss per share | $0.00, rounded | $0.00, rounded |
| Operating cash flow | $(12,050) | $(15,341) |
At September 30, 2014, total assets were $390, consisting of $297 of prepaid expense and $93 of inventory. The company reported no cash or cash equivalents. Total liabilities were $56,502, including $45,905 of related-party loans, $5,000 of customer advances, $4,978 of accrued expenses, and $619 of unrelated-party loans. Stockholders’ deficit was $56,112, and accumulated development-stage deficit was $43,511.
Financing provided $12,050 of cash during the quarter, entirely from related-party loans, offsetting the $12,050 used in operations and leaving ending cash at zero. No cash was used in investing activities. The company had no bank financing or line of credit.
Material changes versus the prior comparable period
- Revenue declined to zero from $3,802, eliminating gross profit of $3,381 recorded in the prior-year quarter.
- Consulting and other expenses decreased to $10,656 from $13,532, but the loss increased to $11,752 from $10,287 because of the absence of gross profit and higher interest expense.
- Operating cash usage improved to $12,050 from $15,341, but this was fully funded by $12,050 of new related-party borrowing.
- Related-party loans increased from $33,855 at June 30, 2014 to $45,905 at September 30, 2014. Two loans carried interest rates of 6% and 4%; additional related-party advances were non-interest-bearing and payable on demand.
- Prepaid expense increased from zero to $297, while inventory remained $93. The product-formula intangible asset was fully amortized.
Outlook, liquidity, risks, and unusual items
Management stated that additional financing is required to continue operations and execute the business plan. It estimated that commercial-scale product development could exceed $100,000 and that an additional $50,000 to $100,000 would be needed for raw materials, packaging, labeling, marketing, and advertising. Planned financing sources include equity issuance, related- or unrelated-party loans, and strategic partners, but no financing commitment had been obtained.
The financial statements disclose substantial doubt about the company’s ability to continue as a going concern. The company had negative working capital of $56,112, no cash, limited revenue, no committed financing sources, and relied on loans from its president and other parties. Management stated that available resources were sufficient for only a limited period and warned that failure to obtain financing could require scaling down or ceasing operations.
On November 12, 2014, the company received approximately $5,750 of additional unsecured, non-interest-bearing related-party financing payable on demand. Management reported approximately $52,000 of short-term financing from the president as of November 14, 2014.
- The business remained pre-commercial or minimally commercial, with limited sales and no revenue during the quarter.
- The company had one employee, its president and chief executive officer, who also served as principal financial officer, chairman, and sole director.
- The company had no patents or trademarks, no written manufacturing arrangement, and depended on third parties for future production.
- Competition, consumer acceptance, product liability, regulatory changes, lack of financing, and dilution from future equity issuance were identified as significant risks.
- The company reported no material litigation, no unregistered equity sales during the quarter, no defaults upon senior securities, and no off-balance-sheet arrangements.
- Management concluded that disclosure controls and procedures were effective as of September 30, 2014, with no material changes to internal controls during the quarter.
Most important facts to verify
- Confirm the issuer: the supplied filing names B-Maven, Inc., while the request identifies Iqstel Inc.
- Verify the fiscal-period labeling, because the filing’s quarter ended September 30, 2014 rather than a conventional calendar first quarter.
- Review the going-concern disclosure and the company’s ability to obtain additional financing.
- Reconcile related-party borrowing, including the $45,905 balance at quarter-end and approximately $5,750 borrowed after quarter-end.
- Assess whether the skincare products generated sustainable sales, given zero quarterly revenue and limited historical revenue.
- Consider potential dilution, since the company had 90,000,000 authorized but unissued common shares and expected to rely on equity or debt financing.