UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2016


-OR-


[   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to ________.


Commission File Number: 000-53974


PMX COMMUNITIES, INC.

(Exact name of Registrant as specified in its charter)


 

 

 

 

 

 

Nevada

 

80-0433114

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)


 

 

 

 

 

 

2700 North Military Trail #130

 

 

Boca Raton, FL 33431

 

(561) 210-5349

(Address of Principal Executive Offices)

 

(Registrant's telephone number)


Securities registered pursuant to Section 12(b) of the Act: None


Securities registered pursuant to section 12(g) of the Act: Common Stock


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.         Yes [ ]    No  [x]   


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes [ ]    No [x]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes [x]   No  [ ]




1




Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                         Yes [x]             No  [ ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Rule 12b-2 of the Exchange Act. (Check one):


 

 

 

 

 

 

 

 

 

Large accelerated filer  [ ]

 

Accelerated filer                      [ ]

Non-accelerated filer    [ ]

 

Smaller reporting company     [x]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes [ ]    No [x]


The number of outstanding shares of the registrant’s common stock, August 22, 2016:

Common Stock – 108,015,124.


DOCUMENTS INCORPORATED BY REFERENCE


  None.




2




Table of Contents


 

 

 

 

 

 

 

 

Page

 

 

No.

Part I.

Financial Information

 

 

 

 

Item 1.  

Financial Statements (Unaudited)

4

Item 2.


Management’s Discussion and Analysis of Financial Condition and Results of Operations.

15

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

19

 

 

 

Item 4.

Controls and Procedures

19

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

20

 

 

 

Item 1a.

Risk Factors

20

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Proceeds

20

 

 

 

Item 3.

Defaults Upon Senior Securities

20

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

20

 

 

 

Item 5.

Other Information

20

 

 

 

Item 6.

Exhibits

20

 

 

 

 

Signatures

21



3




PMX COMMUNITIES INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2016 (UNAUDITED) AND DECEMBER 31, 2015


 

June 30,

December 31,

 

2016

2015

 

 (unaudited)

 

Assets

 

 

 

 

 

Current assets

 

 

  Cash and cash equivalents

$                 -

$                   -

Total current assets

-

-

 

 

 

Fixed assets

 

 

   Equipment , net

48,408

63,030

 

 

 

Total assets

$       48,408

$         63,030

 

 

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

Current liabilities

 

 

  Accounts Payable

$        56,837

$         35,379

  Accrued Interest

103,684

92,017

  Notes payable - short term

155,867

153,367

Total current liabilities

316,388

280,763

 

 

 

Notes payable - long term

-

-

Total Liabilities

316,388

280,763

 

 

 

Stockholders' deficit

 

 

 

 

 

 Preferred stock, $0.0001 par value; authorized 10,000,000  shares, no shares issued or outstanding

-

-

 Common stock, $0.0001 par value; authorized 500,000,000

 

 

shares; issued and outstanding 108,015,124 and 97,115,124 shares as of June 30, 2016 and December 31, 2015, respectively

10,801

9,711

  Common stock payable

16,800

38,150

  Additional paid-in capital

3,061,321

3,024,261

  Accumulated deficit

(3,356,902)

(3,289,855)

Total stockholders' deficit

(267,980)

(217,733)

Total liabilities and stockholders' deficit

$        48,408

$         63,030



See accompanying notes to consolidated financial statements.



4




PMX COMMUNITIES INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)


 

For the Three Months Ended June 30,

For the Six Months Ended June 30,

 

2016

2015

2016

2015

 

 

 

 

 

Net sales

$             -

$              -

$           -

$             -

Cost of sales

-

-

-

-

Gross loss

-

-

-

-

 

 

 

 

 

Costs and expenses:

 

 

 

 

  Depreciation

6,866

7,757

14,622

15,513

  Selling, general and administrative expenses

42,598

37,899

42,598

57,133

 

49,464

45,656

57,220

72,646

Loss from operations

(49,464)

(45,656)

(57,220)

(72,646)

 

 

 

 

 

Other income (expense):

 

 

 

 

Interest expense

(5,895)

(12,760)

(11,668)

(21,264)

Gain on forgiveness of accounts payable

-

-

1,841

-

 

(5,895)

(12,760)

(9,827)

(21,264)

 

 

 

 

 

Income (loss) before income taxes

(55,359)

(58,416)

(67,047)

(93,910)

Income taxes  

-

-

-

-

Net income (loss)

$ (55,359)

$ (58,416)

$ (67,047)

$  (93,910)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

$     (0.00)

$     (0.00)

$     (0.00)

$       (0.00)

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

  Basic

97,474,465

96,367,871

97,294,794

94,750,483



See accompanying notes to consolidated financial statements.




5




PMX COMMUNITIES INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)


 

For the Six Month's Ended June 30,

 

2016

2015

 

 

 

Cash flows from operating activities

 

 

Net income (loss)

$    (67,047)

$      (93,910)

Adjustments to reconcile net (loss) to net

 

 

 cash provided by (used in) operating activities:

 

 

  Common stock to be issued/ issuable for services

16,800

15,513

  Depreciation

14,622

16,000

Change in assets and liabilities

 

 

    Security deposit

-

4,500

    Accounts payable

21,458

(5,500)

    Accrued interest

11,667

16,879

Net cash used in operating activities

(2,500)

(46,518)

 

 

 

Cash flows from investing activities

 

 

   Proceeds from sale of fixed assets

-

-

Net cash provided by investing activities

-

-

 

 

 

 

 

 

Cash flows from financing activities

 

 

  Increase in bank overdraft

-

145

  Proceeds from related party notes payable

2,500

46,360

 

 

 

Net cash provided by  financing activities

2,500

46,505

 

 

 

Net decrease in cash and cash equivalents

-

(13)

Cash and cash equivalents, beginning of period

-

13

Cash and cash equivalents, end of period

$              -

$                -

 

 

 

Supplementary information:

 

 

  Cash paid for :

 

 

     Interest

$              -

$         4,685

     Income taxes

$              -

$                 -

 

 

 

Non-cash transactions:

 

 

     Conversion of notes payable and accrued interest into common stock

$              -

$       59,524



See accompanying notes to consolidated financial statements.



6



PMX COMMUNITIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015


NOTE 1 – DESCRIPTION OF BUSINESS


PMX Communities, Inc.  "PMX" was organized under the laws of the State of Nevada on December 29, 2004 under the name Merge II, Inc. and changed its name to PMX Communities, Inc. effective February 10, 2009. PMX's year end is December 31.


On September 28, 2010, PMX formed PMX Gold, LLC, (“PMX Gold”) a Florida limited liability company as a wholly owned subsidiary of the Company to assist with evaluating and pursuing opportunities within the Gold Mining and Retail Gold Sales Industries.


On September 28, 2011, PMX formed PMX Gold Bullion Sales Inc. (“PMX Bullion”), a Florida corporation as a wholly owned subsidiary of the Company.


PMX, (through its wholly owned subsidiaries PMX Gold, LLC and PMX Gold Bullion Sales Inc.) focuses on the development of leveraged opportunities within the Retail Gold Sales and Gold Mining Industries.


PMX Communities, Inc. and its wholly-owned subsidiaries are hereafter referred to as “the Company”.


NOTE 2 - GOING CONCERN


The accompanying condensed unaudited consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying condensed unaudited consolidated financial statements, the Company had a net loss of $67,047 and $93,910 for the six months ended June 30, 2016 and 2015, respectively. The Company has a working capital deficit of $316,388 and a stockholders' deficit of $267,980 at June 30, 2016.


Based on the above considerations, there is a substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and generate future profits or attain working capital through debt or equity financing.  Management hopes that the continued placement of precious metals machines in the U.S.A. and the potential of a global



7



rollout of additional dispensing terminals will bring sufficient revenues and investment into the Company to sustain its growth and operations.  Furthermore, management believes organic growth through a new strategy in the Company’s subsidiaries will assist the Company in achievement of its goals. There is no assurance that this series of events will be satisfactorily completed. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


Our financial statements are stated in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").


Interim Financial Statements


The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. While we believe that the disclosures presented herein are adequate and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated filed with the SEC in our Form 10K on April 19, 2016. Operating results for the interim periods presented are not necessarily indicative of the results for the full year.


Use of Estimates


The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the period presented.




8



We make our estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.


Principles of Consolidation


The consolidated financial statements include the accounts of PMX Communities, Inc. and its wholly-owned subsidiaries, PMX Gold, LLC and PMX Gold Bullion Sales, Inc. All inter-company transactions have been eliminated


Cash and Cash Equivalents


The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.


Financial Instruments and Fair Value


The Company’s balance sheet includes certain financial instruments, including cash, accounts payable, accrued expenses and notes payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.


ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:




9



Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities


Level 2

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.


Level 3

Inputs that are both significant to the fair value measurement and unobservable.


Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.


Equipment


Equipment is stated at cost, less accumulated depreciation. Depreciation is provided using the straight line method over the estimated useful life of five years for equipment, seven years for molds and seven years for furniture and fixtures.


Impairment of Long-Lived Assets


The Company evaluates the recoverability of long-lived assets and the related estimated remaining useful lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In such circumstances, those assets are written down to estimated fair value. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset's estimated fair value and its book value.




10



Common Stock, Common Stock Options and Warrants


The Company uses the fair value recognition provision of ASC 718, "Compensation-Stock Compensation," which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments. The Company uses the Black-Scholes option pricing model to calculate the fair value of any equity instruments on the grant date.


The Company also uses the provisions of ASC 505-50, "Equity Based Payments to Non-Employees," to account for stock-based compensation awards issued to non-employees for services. Such awards for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50.


Income Taxes


Under the asset and liability method prescribed under ASC 740, Income Taxes, the Company uses the liability method of accounting for income taxes. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.


The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a "more-likely-than-not" threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of June 30, 2016 and December 31, 2015, the Company had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. The tax years for December 31, 2012-2015 remain subject to review by federal and state tax authorities.




11



Revenue Recognition


The Company recognizes revenue when it is realized and realizable.


- Persuasive evidence of an arrangement exists; and

- Delivery has occurred; and

- Price is fixed or determinable; and

- Collectability is reasonably assured


Subject to these criterions, the Company recognizes revenue at the time the merchandise is purchased and the machine dispenses the relevant merchandise. The Company offers its individual customers a 14-day warranty if the item is returned and if the TEP packaging is not broken. The customer will receive their money back. The Company estimates an allowance for sales returns based on historical experience with product returns. The Company closely follows the provisions of ASC 605, Revenue Recognition, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above.


Income (loss) Per Common Share


Basic income (loss) per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. No potentially dilutive debt or equity instruments were issued or outstanding during the three months ended June 30, 2016 and 2015.  


Recent Authoritative Accounting Pronouncement


From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date.  We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.

 

ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606) issued May 28, 2014 by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017 will be evaluated as to impact and implemented accordingly.

 

ASU Update 2014-15 Presentation of Financial Statements - Going Concern (Sub Topic (205-40) issued August 27, 2014 by FASB defines managements' responsibility to evaluate whether there is a substantial doubt about an organizations ability to continue as a going concern.  The additional disclosure required is effective after December 31, 2016 and will be evaluated as to impact and implemented accordingly.




12



NOTE 4 – PROPERTY AND EQUIPMENT


Components of property and equipment are as follows:


 

June 30, 2016

December 31, 2015

 

 (unaudited)

 

Gold Dispensing Terminals

$     146,224

$          146,224

Molds

8,909

8,909

Office Equipment

1,600

1,600

Office Furniture and Fixtures

3,366

3,366

Less:  Accumulated Depreciation

(111,691)

(97,069)

 

 

 

Property and Equipment, net

$       48,408

$            63,030


Depreciation for the six months ended June 30, 2016 and 2015 was $14,622 and $15,513, respectively.


NOTE 5 – NOTES PAYABLE


Promissory Notes carry outstanding principal balances of $155,867 and $153,367 as of June 30, 2016 and December 31, 2015, respectively.  Related accrued interest was $103,684 and $92,017 as of June 30, 2016 and December 31, 2015, respectively.  As of June 30, 2016, all of these notes are due on demand as their maturity dates have passed.  All of these notes bear interest at a rate of 5% per annum.


NOTE 6 – RELATED PARTY TRANSACTIONS


During the six months ended June 30, 2016 and 2015, one shareholder and his beneficial interests made aggregate loans of $2,500 and $46,360, respectively, to the Company.  The loans bear interest at 5% and each has a six-month maturity.


During the six months ended June 30, 2016, a related party shareholder paid $20,000 in expenses on the Company’s behalf.  The amount is included in accounts payable.




13



NOTE 7 – SUBSEQUENT EVENTS


The Company has evaluated events and transactions subsequent to June 30, 2016 through the date of filing with the Securities and Exchange Commission (date available for issuance) that would require reporting and noted the following:


On July 1, 2016, the Board of Directors approved to issue 2,000,000 shares of common stock to an officer of the company and 6,000,000 shares of common stock to related parties for services at $0.0042 per share or $33,600.


On July 18, 2016, the Board of Directors approved an increase in the number of shares available for issuance through the 2011 stock awards plan from 10,000,000 common shares to 17,700,000 common shares.



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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Trends and Uncertainties


The registrant has developed its PMX Gold Bullion Dispensing Terminal prototype called the MGIV and deployed the first prototype in Boca Raton, Florida, U.S.A. The terminal is an unmanned dispenser, which allows for gold dispensing and deposit and account management functions. The terminal also incorporated conventional ATM and touch-screen technology. After a successful 6 months test, the MGIV was removed in July 2013 from the first location.

 

The registrant has been assigned the ownership rights to two U.S. Provisional Patent Applications and a final International Patent Application Number PCT/US2012/020486 (“Unattended Precious Metal Distribution System, Methods and Apparatus”), and has filed next stage patent applications for its proprietary precious metals machine, in Australia, South Africa and the United States of America.

 

Our business operations are currently focused in three areas. The first original focus was the consumer demand for essentially one commodity gold through a dispensing terminal. Specifically, we were addressing the markets of physical gold ownership by retail investors, as well as developing and offering an ancillary set of financial services that would complement the purchase and sale of gold and other precious metals by retail investors. Any decrease in demand for gold or gold investments could still materially adversely affect our revenues in this area and profitability and general business prospects.


Presently, we are developing a second revenue stream.  Our online PMX Goldstore, which sells 24k bullion gold bars and coins, launched in August 2015.  We are planning on initiating a third business operation which will involve the sales of our dispensing terminals globally through direct sales and distributor channels.


In the first quarter of 2015 we widened our terminal product line to develop new machines on the platform of the original MGIV gold terminal. PMX started due diligence in states that have passed legislation to permit businesses in medical marijuana and recreational marijuana dispensaries. The research was conducted to accumulate information to decide whether the terminal would be an efficient machine to place in dispensaries.  The Company concluded that the ability to enter this new marketplace could potentially be a new revenue producing opportunity.  The registrant continues working with consultants and lawyers in these states to develop a compliant terminal to quickly deploy to dispensaries. The commercialization of any industry has barriers to entry that change quickly and PMX is hopeful that the terminal will meet them. There are risks that the Company must consider but since the terminal is built on the same platform as the MGIV gold terminal, PMX feels the costs to develop this terminal are minimal.  

 



15



In the second quarter of 2015 we continued our business strategy from the first quarter in hopes of building a strong revenue platform from our terminal’s placements in the near future.  In the third quarter of 2015 we continued to develop our relationships both globally with our gold terminals and domestically with our gold and other product line machines.  The Company continues to explore new and innovative platforms to hopefully develop multiple revenue streams for our dispensing terminals.  The fourth quarter of 2015 was quiet and we continue as a management team to outsource diverse avenues to grow the company and seek new investors.  


We welcome 2016 anxiously as we continue exploration of new relationships for the Company. The Company has been looking at various strategic technology partnerships this first quarter that we hope will bring revenues to the bottom line in 2016.


Results of Operations for the three months ended June 30, 2016 and 2015


For the three months ended June 30, 2016, we did not record any revenues.  We recorded depreciation expenses of $6,866 and selling, general and administrative expenses of $42,598.  We paid interest expenses of $5,895.  As a result, we had a net loss of $55,359 for the three months ended June 30, 2016.


Comparatively, for the three months ended June 30, 2015, we did not record any revenues.  We recorded depreciation expenses of $7,757 and selling, general and administrative expenses of $37,899.  We paid interest expenses of $12,760.  As a result, we had a net loss of $58,416 for the three months ended June 30, 2015.


The decrease in net loss of $3,057 is due primarily to the Company decreasing selling, general and administrative expenses during the three months ended June 30, 2016.  This is the result of decreased operations while we shift our business focus from gold vending machines to exploring new markets.


Results of Operations for the six months ended June 30, 2016 and 2015


For the six months ended June 30, 2016, we did not record any revenues.  We recorded depreciation expenses of $14,622 and selling, general and administrative expenses of $42,598.  We paid interest expenses of $11,688 and had a gain on forgiveness of accounts payable of $1,841.  As a result, we had a net loss of $67,047 for the six months ended June 30, 2016.


Comparatively, for the six months ended June 30, 2015, we did not record any revenues.  We recorded depreciation expenses of $15,513 and selling, general and administrative expenses of $57,133.  We paid interest expenses of $21,264.  As a result, we had a net loss of $93,910 for the six months ended June 30, 2015.


The decrease in net loss of $26,863 is due primarily to decreased selling, general and administrative expenses and decrease interest expense during the six months ended June 30, 2016.  This is the result of decreased operations while we shift our business focus from gold vending machines to exploring new markets.



16




Liquidity and Capital Resources


The accompanying condensed unaudited consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying condensed unaudited consolidated financial statements, the Company had a net loss of $67,047 and $93,910 for the six months ended June 30, 2016 and 2015, respectively. The Company has a working capital deficit of $316,388 and $280,763, and a stockholders' deficit of $267,980 and $217,733 as of June 30, 2016 and December 31, 2015, respectively.


Based on the above considerations, there is a substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and generate future profits or attain working capital through debt or equity financing.  Management hopes that the continued placement of precious metals machines in the U.S.A. and the potential of a global rollout of additional dispensing terminals will bring sufficient revenues and investment into the Company to sustain its growth and operations.  Furthermore, management believes organic growth through a new strategy in the Company’s subsidiaries will assist the Company in achievement of its goals. There is no assurance that this series of events will be satisfactorily completed. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


Cash Flows for the six months ended June 30, 2016 and 2015

Operating Activities


During the six months ended June 30, 2016, we incurred a net loss of $67,047.  We had an adjustment of $16,800 due to the issuance of common stock for services and common stock issuable for services and $14,622 due to depreciation.  We had the following changes in assets and liabilities: an increase of $21,458 of accounts payable and an increase of $11,667 due to accrued interest.  As a result, we had net cash used in operating activities of $2,500 for the six months ended June 30, 2016.


During the six months ended June 30, 2015, we incurred a net loss of $93,910.  We had an adjustment of $15,513 due to the issuance of common stock for services and common stock issuable for services and $16,000 due to depreciation.  We had the following changes in assets and liabilities: an increase of $4,500 due to a security deposit, a decrease of $5,500 due to accounts payable and an increase of $16,879 due to accrued interest.  As a result, we had net cash used in operating activities of $46,518 for the six months ended June 30, 2015.


Investing Activities


For the six months ended June 30, 2016 and 2015, we did not pursue any investing activities.




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Financing Activities


For the six months ended June 30, 2016, we received $2,500 as proceeds from related party notes payable, resulting in net cash provided by financing activities of $2,500 for the period.


For the three months ended June 30, 2015, we received $145 due to an increase in bank overdraft and $46,360 as proceeds from related party notes payable, resulting in net cash provided by financing activities of $46,505 for the period.


Our internal and external sources of liquidity have included proceeds raised from subscription agreements and private placements and advances from related parties.  We are currently not aware of any trends that are reasonably likely to have a material impact on our liquidity.  We are currently exploring new relationships for the Company in order to pursue new courses of business.


Going Concern

To date, the registrant has incurred significant losses.  The registrant’s viability is dependent upon its ability to obtain future financing and the success of its future operations.  These factors raise substantial doubt as to the registrant’s ability to continue as a going concern.  


Off-Balance Sheet Arrangements

The registrant had no material off-balance sheet arrangements as of June 30, 2016.


Critical Accounting Policies and Estimates

Management’s discussion and analysis of its financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.


The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets and contingencies. We believe our estimates and assumptions to be reasonable under the circumstances. However, actual results could differ from those estimates under different assumptions or conditions. Our financial statements are based on the assumption that we will continue as a going concern. If we are unable to continue as a going concern we would experience additional losses from the write-down of assets.


The registrant uses the fair value recognition provision of ASC 718, “Compensation-Stock Compensation,” which requires the registrant to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments. The registrant uses the Black-Scholes option pricing model to calculate the fair value of any equity instruments on the grant date.




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The registrant also uses the provisions of ASC 505-50, “Equity Based Payments to Non-Employees,” to account for stock-based compensation awards issued to non-employees for services. Such awards for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50.


New Accounting Pronouncements


The registrant has adopted all recently issued accounting pronouncements.  The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the registrant.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk


Not applicable to smaller reporting companies.


Item 4. Controls and Procedures


During the period ended June 30, 2016, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Evaluation of Disclosure Controls and Procedures


Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended.  Based on this evaluation, our chief executive officer and principal financial officers have concluded such controls and procedures to be ineffective as of June 30, 2016 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.




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Part II.  Other Information


Item 1. Legal Proceeding

The registrant is not a party to, and its property is not the subject of, any material pending legal proceedings.


Item 1A.  Risk Factors

Not applicable to smaller reporting companies.


Item 2. Unregistered Sales Of Equity Securities and Use of Proceeds


None


Item 3. Defaults Upon Senior Securities

None


Item 4. Mine Safety Disclosures

Not Applicable


Item 5. Other Information

None


Item 6. Exhibits

The following documents are filed as a part of this report:


Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**   XBRL Instance Document

101.SCH**   XBRL Taxonomy Extension Schema Document

101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**   XBRL Taxonomy Extension Label Linkbase Document

101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document

*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.




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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



PMX COMMUNITIES, INC.


/s/ Lindsey Perry

Lindsey Perry

Chief Executive Officer

Chief Financial Officer


Dated: August 22, 2016





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