Business Context and Reporting Period
Company: PureSnax International, Inc. (formerly B-Maven, Inc.)
Filing Type: Form 10-K (Annual Report)
Period Ended: June 30, 2016
Business Overview: The company operates as a wellness brand focused on manufacturing, distributing, and marketing healthy snacks and foods, including sugar-free, peanut-free, and Kosher products. Key product lines include Xylitol sweeteners, mints, rice delites, and coated popcorn. The company pivoted from a previous skincare business to the health food sector via a license agreement with PureSnax Company, Inc. As of the reporting date, the company had no full-time employees and relied on part-time consultants and directors.
Key Financial Metrics
| Metric | Year Ended June 30, 2016 | Year Ended June 30, 2015 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(242,397) | $(32,871) |
| Total Expenses | $173,713 | $36,077 |
| Cash and Cash Equivalents | $23,790 | $0 |
| Working Capital Deficit | $(170,928) | $(9,943) |
| Accumulated Deficit | $(307,027) | $(64,630) |
| Total Liabilities | $208,908 | $9,943 |
| Convertible Notes Payable | $35,327 | $0 |
| Derivative Liability | $108,103 | $0 |
| Shares Outstanding | 100,235,384 | 400,000,000 |
Material Changes vs. Prior Period
- Revenue: The company generated no revenue in either period, remaining in a pre-revenue developmental stage.
- Net Loss: Net loss increased significantly by approximately 637% to $242,397 from $32,871. This was driven by a rise in operating expenses and significant non-cash charges.
- Expenses: Total operating expenses rose to $173,713 from $36,077. Increases were primarily due to consulting and other expenses ($146,458 vs. $36,077) and the initiation of marketing expenses ($22,163 vs. $0).
- Debt and Liabilities: Total liabilities surged to $208,908 from $9,943. This includes the issuance of convertible notes payable ($35,327) and the recognition of a derivative liability ($108,103) associated with those notes.
- Capital Structure: The company executed a reverse stock split/cancellation of 300 million shares in late 2015, reducing outstanding shares from 400 million to approximately 100 million by year-end 2016.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's ability to continue as a going concern is in substantial doubt. The company has incurred accumulated losses of over $300,000 and has no revenue. Continuation depends on obtaining adequate financing and achieving profitable operations.
- Liquidity: Cash on hand ($23,790) is insufficient to support daily operations. Management plans to raise additional working capital through the issuance of stock and loans from investors.
- Future Funding Needs: Management estimates a need for an additional $50,000 to $100,000 to purchase raw materials, packaging, and fund introductory marketing programs to reach commercial production.
- Strategy: The company intends to focus on global wholesale sales, e-commerce development, and vending/school channels. It plans to expand its team to five direct employees within five years.
- Risks: Key risks include the inability to secure financing, failure to generate revenue, and the volatility of derivative liabilities associated with convertible notes. The company also faces regulatory risks regarding FDA compliance and internet commerce regulations.
Investor Verification Checklist
- Capital Adequacy: Verify if the company has secured the estimated $50,000–$100,000 in additional funding required to move from development to commercial production.
- Derivative Liability: Review the terms of the convertible notes and the associated derivative liability ($108,103), as fluctuations in stock price could significantly increase this liability and dilute shareholders.
- Revenue Generation: Confirm if any sales have been generated since June 30, 2016, given the company has had zero revenue for two consecutive years.
- Related Party Transactions: Scrutinize the $19,066 in loans from related parties (Patrick Gosselin and Gosselin Consulting Group) and the 10% royalty agreement with PureSnax Company, Inc., in which the CEO holds a minority interest.
- Stock Dilution: Monitor subsequent conversions of convertible notes and warrants, as noted in the "Subsequent Events" section, which have already resulted in significant share issuances post-filing.