Business Context and Reporting Period
Company: Bioflamex Corporation (formerly Deer Bay Resources, Inc.)
Filing Type: Form 10-K (Annual Report)
Period Ended: February 28, 2011
Status: Development Stage Company / Smaller Reporting Company
The Company pivoted from a mineral exploration business to the development of environmentally friendly fire extinguishing and prevention products. On January 25, 2011, it acquired intellectual property related to biological fire fighting formulations and changed its name to Bioflamex Corporation. The previous mineral claim (Emmy Claim) was allowed to expire in February 2011. The Company is currently in the pre-revenue stage, focusing on product testing, patent applications, and securing regulatory approvals (UL, NFPA, CAL FIRE).
Key Financial Metrics
| Metric | Year Ended Feb 28, 2011 | Year Ended Feb 28, 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(45,377) | $(12,441) |
| Accumulated Deficit (Inception) | $(134,581) | $(89,204) |
| Total Assets | $1,201,059 | $96 |
| Current Assets | $10,059 | $96 |
| Cash and Cash Equivalents | $59 | $96 |
| Intangible Assets | $1,191,000 | $0 |
| Total Liabilities | $68,840 | $13,500 |
| Working Capital | $1,719 | $(13,404) |
| Operating Cash Flow | $(49,537) | $(8,941) |
Capital Structure: As of March 16, 2011, 92,466,667 shares of common stock were outstanding. The Company holds $60,500 in convertible debt (maturing Dec 2012) and $8,340 in accounts payable.
Material Changes vs. Prior Period
- Business Pivot: Transitioned from mineral exploration to fire safety technology. The Emmy Claim mineral asset was abandoned.
- Asset Acquisition: Acquired intellectual property (patents and trademarks for Bioflamex and SAFIRE products) valued at $1,191,000. This was recorded as a non-cash transaction in exchange for 38,000,000 shares of common stock issued to the new management team.
- Expense Increase: Operating expenses rose to $45,377 from $12,441, primarily driven by professional fees ($37,682 vs. $10,500) related to the restructuring and asset acquisition.
- Financing: Raised $60,500 via convertible debt and $50,000 via a subsequent private placement (April 2011) to fund operations.
Outlook, Risks, and Management Commentary
Guidance and Capital Needs: Management states a requirement for a cash injection of $2,000,000 to begin operations, launch marketing, manufacture products, and generate revenue. There are no formal commitments for this funding at the time of filing.
Going Concern: The Company has incurred recurring losses and has an accumulated deficit. The auditor has raised substantial doubt about the Company's ability to continue as a going concern. Success is contingent upon obtaining additional financing and generating profitable operations.
Risks and Contingencies:
- Liquidity Risk: Cash on hand ($59) is insufficient to operate for the next 12 months.
- Regulatory Risk: Revenue generation is dependent on obtaining UL, NFPA, and CAL FIRE certifications, which are estimated to take 3-6 months.
- Internal Controls: Management identified material weaknesses in internal controls, including inadequate segregation of duties and insufficient written policies.
- Market Risk: The stock trades on the OTC Bulletin Board (Symbol: DBAY) and is subject to penny stock regulations, which may limit liquidity.
Investor Verification Checklist
- Capital Sufficiency: Verify if the required $2,000,000 funding has been secured, as current cash ($59) is critically low.
- Regulatory Approvals: Confirm the status of UL, NFPA, and CAL FIRE certifications, which are prerequisites for sales.
- Related Party Transactions: Review the $1,191,000 valuation of the intellectual property acquired from the new CEO and COO (Kristian Schiorring and Henrik Dahlerup) in exchange for 38 million shares.
- Debt Obligations: Monitor the $60,500 convertible debt maturing in December 2012 and the terms of conversion.
- Internal Controls: Assess the remediation plan for the identified material weaknesses in financial reporting controls.