Business Context and Reporting Period
The submitted filing is a Form 10-Q for B-Maven, Inc., not Iqstel Inc., and covers the quarter ended September 30, 2012. The request metadata identifies “Iqstel Inc., 2011 Q1,” which does not match the filing text. B-Maven was a Nevada development-stage company and self-identified shell company developing the E-Scentual skin-care product line. It had no commercial revenue, one employee, and 10,000,000 common shares outstanding as of November 14, 2012.
Financial Condition and Key Metrics
| Metric | Three months ended September 30, 2012 | Comparable 2011 period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses before tax | $9,846 | $5,844 |
| Net loss | $10,646 | $6,095 |
| Basic and diluted loss per share | $0.00, rounded | $0.00, rounded |
| Net cash used in operating activities | $5,731 | $6,143 |
- At September 30, 2012, cash was $10,519, inventory was $530, and total assets were $11,986.
- Total liabilities were $77,734, including $63,902 of accrued expenses, $12,595 of unrelated-party loans, and $1,237 of related-party loans.
- Stockholders’ deficit was $65,748; reported negative working capital was $66,685.
- Cash provided by financing activities was $15,933, including $25,000 from the issuance of 2,500,000 common shares, partially offset by $9,235 of offering costs and additional borrowings.
- Loans were unsecured, interest-free, and had no stated repayment terms.
- The E-Scentual product formulas and samples were carried at $937 net after $313 of quarterly amortization.
- The filing reports no interest paid and $800 of income taxes paid during the quarter.
Material Changes Versus the Prior Comparable Period
- Revenue remained zero.
- Pre-tax expenses increased to $9,846 from $5,844, principally because consulting, audit, accounting, and public-company costs increased.
- Net loss increased to $10,646 from $6,095, including an $800 state income-tax expense that was not recorded in the comparable period.
- Operating cash use improved modestly to $5,731 from $6,143.
- The company completed a registered offering on August 1, 2012, issuing 2,500,000 shares to 17 investors for $25,000. Founder ownership declined from 100% to 75%.
- Deferred offering costs of $60,439 were offset against additional paid-in capital; the filing states that $42,500 of related costs remained included in accrued expenses.
Guidance, Outlook, Risks, and Unusual Items
- Management stated that product development could cost more than $100,000 and that an additional $50,000 to $100,000 would be needed for raw materials, production, packaging, marketing, and advertising.
- Management expected limited product introductions and potential revenue in late 2012 or 2013, depending on financing; the filing provides differing timing estimates of approximately 120 to 270 days after receiving additional funds.
- The company had no committed financing source and stated that failure to obtain additional capital could prevent execution of its business plan or require it to scale down or cease operations.
- The financial statements include a going-concern uncertainty. The company had no revenue, negative working capital, accumulated development-stage losses of $37,809, and limited cash resources.
- Management indicated that existing resources were expected to support operations for only approximately four to six months, with monthly operating expenses of roughly $3,000 to $4,000.
- Subsequent to quarter-end, former counsel’s $20,000 balance was reduced to $9,000; after a $4,000 payment, $5,000 remained payable. Current counsel also reduced its fee by $3,000, leaving $19,500 payable.
- Key risks include dependence on the founder, lack of patents or trademarks, uncontracted third-party manufacturing, uncertain consumer acceptance, intense competition, product-liability exposure, dilution from future equity issuance, and the absence of an established trading market.
- The company reported no pending litigation, no off-balance-sheet arrangements, and no defaults upon senior securities.
- Management stated that disclosure controls were effective and that no material changes occurred in internal controls during the quarter.
Important Facts for Investors to Verify
- Verify the issuer and period: the source is B-Maven, Inc.’s September 30, 2012 Form 10-Q, not an Iqstel Inc. 2011 first-quarter filing.
- Reconcile the balance-sheet total: the filing shows total assets of $11,986, while the June 30, 2012 comparative column displays inconsistent totals of $62,536 and $65,536 in different locations.
- Confirm the treatment and remaining balance of offering costs, accrued professional fees, and the post-quarter-end legal settlements.
- Assess whether the $10,519 cash balance and available financing were sufficient to fund operations beyond the stated four-to-six-month period.
- Evaluate the feasibility, timing, and financing requirements for developing and commercially launching the E-Scentual products.
- Review the going-concern disclosure, founder dependence, dilution risk, shell-company status, and lack of an established public trading market.