SEC Form 10-K Summary
Filing entity and period: The supplied filing is for B-Maven, Inc., not Iqstel Inc., and covers the fiscal year ended June 30, 2012. The request metadata identifies “Iqstel Inc.” and “2010 Q4,” which does not match the filing text.
Business Context and Reporting Period
B-Maven was incorporated in Nevada on June 24, 2011, and remained a development-stage, shell company focused on developing, manufacturing, marketing and selling the E-Scentual natural skin-care collection. As of September 27, 2012, the company had one employee, its founder and CEO, Anna C. Jones, who also served as sole director and principal financial officer.
The company had not commercially launched a product or generated revenue by June 30, 2012. It owned the E-Scentual formulations and product samples but had no patents or trademarks. Its Form S-1 offering became effective June 19, 2012, and closed on August 1, 2012, after the fiscal year-end.
Key Financial Metrics
| Metric | FY ended June 30, 2012 | Comparable period |
|---|---|---|
| Revenue | $0 | $0 for June 24–30, 2011 |
| Net loss | $(21,498) | $(5,665) for June 24–30, 2011 |
| Sample and marketing expense | $2,988 | $0 |
| Consulting and other expense | $17,260 | $0 |
| Amortization expense | $1,250 | $0 |
| Cash at period end | $317 | $0 |
| Total assets | $62,536 | $2,500 |
| Total liabilities | $82,199 | $665 |
| Working capital | $(81,352) | $(665) |
| Stockholders’ equity/(deficit) | $(19,663) | $1,835 |
| Net cash used in operating activities | $(13,347) | $0 |
| Net cash provided by financing activities | $13,664 | $0 |
No meaningful gross margin, operating margin or EBITDA analysis is available because the company had no revenue and was not conducting revenue-producing operations.
Material Changes Versus the Prior Comparable Period
- Net loss increased from $5,665 for the initial seven-day period in 2011 to $21,498 for FY2012, primarily reflecting product development, consulting, sample and marketing costs.
- Current liabilities increased to $82,199 from $665, driven by accrued expenses and loans from related and unrelated parties.
- Working-capital deficiency increased to $81,352 from $665, while stockholders’ equity declined to a $19,663 deficit.
- Cash flow from operations became negative at $13,347, partially funded by $13,664 of financing proceeds.
- At June 30, 2012, the company had 7.5 million common shares outstanding. After year-end, it issued 2.5 million shares to 17 investors at $0.01 per share, raising $25,000.
- Deferred offering costs of $60,439 were recorded at June 30, 2012 and subsequently offset against additional paid-in capital when the offering closed.
Liquidity, Debt and Going-Concern Matters
The independent auditor included an explanatory paragraph stating that operating losses raised substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no adjustments that might result from this uncertainty.
At June 30, 2012, the company had $1,237 of unsecured, non-interest-bearing related-party loans and $12,427 of similar loans from unrelated parties. The filing states that accrued expenses included approximately $68,535, including unpaid legal and other professional costs. Management estimated operating expenses of approximately $1,000 to $2,000 per month and stated that available resources were sufficient for approximately four to six months.
Management expected to require at least $50,000 to $100,000 for initial raw materials, marketing and advertising, in addition to potentially more than $100,000 for product development. No committed financing source existed at the filing date.
Outlook, Commentary, Risks and Unusual Items
- Management intended to introduce products gradually during winter 2012–2013 and believed limited Southern California revenue might begin 180 to 270 days after obtaining additional financing.
- Management stated that revenue could potentially begin within 12 months after receiving sufficient funding, but emphasized that financing and product-launch assumptions were uncertain.
- The business was dependent almost entirely on Ms. Jones, who had no employment agreement and provided services without cash compensation.
- The company had no established manufacturing, distribution or supplier contracts and expected to rely on third-party manufacturers.
- The company faced substantial competition from significantly larger skin-care and cosmetics companies with greater financial, marketing and product-development resources.
- Consumer acceptance, product efficacy, product-liability exposure, regulatory changes and lack of intellectual-property protection were identified as material risks.
- There was no established trading market for the common stock, no approved OTCBB quotation, and substantial penny-stock, liquidity, resale and potential dilution risks.
- Ms. Jones controlled 75% of the outstanding shares after the post-year-end offering, giving her effective control over shareholder and corporate decisions.
- The company had no material litigation, no off-balance-sheet arrangements and no declared or expected cash dividends.
- Management reported that disclosure controls and internal control over financial reporting were effective, but the company had only one director and no independent audit or compensation committees.
Most Important Facts to Verify
- Confirm that the intended issuer is B-Maven, Inc., rather than Iqstel Inc., and that the intended period is FY2012 rather than 2010 Q4.
- Verify the $25,000 post-year-end equity financing, the 2.5 million shares issued and the treatment of $60,439 in deferred offering costs.
- Review the going-concern uncertainty, $81,352 working-capital deficit, $82,199 of liabilities and only $317 of cash at June 30, 2012.
- Assess whether additional financing was obtained and whether the planned E-Scentual products were ever commercially launched or generated sales.
- Verify accrued legal and professional fees, related-party and third-party loans, and their absence of stated interest or repayment terms.
- Evaluate dilution, control and liquidity risks associated with the 100 million authorized common shares, 75% founder ownership and lack of an established trading market.