PMX Communities, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2015 and December 31, 2014
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. PMX's year end is December 31.
On September 28, 2010, the Company 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, the Company 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
As reflected in the accompanying consolidated financial statements, the Company had a net (loss) of $(119,205) and ($334,093) for the years ended December 31, 2015 and 2014, respectively. The Company has a working capital deficit of $280,763 and a accumulated deficit of $3,289,855 as of December 31, 2015.
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/or attain working capital through financing or equity. 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, the registrant feels organic growth through a new acquisition strategy in their other subsidiaries will assist the registrant in achievement of their goals. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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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").
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates include the valuation of inventories, deferred tax assets and equity transactions.
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.
Financial Instruments and Fair Value
The Companys 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.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2015. 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 five years for furniture and fixtures.
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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.
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 December 31, 2015 and 2014, 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
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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, 2011-2015 remain subject to review by federal and state tax authorities.
Income tax expense (benefit) consists of the following for the years ended December 31:
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| |
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2015
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2014
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Current:
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|
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Deferred
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(6,100)
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(54,000)
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Federal
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(35,100)
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(64,800)
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State
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(3,700)
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(6,900)
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Total
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(44,900)
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(125,700)
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|
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Less reserve for allowance
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44,900
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125,700
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Total income tax expense (benefit)
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-
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-
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The net deferred income tax assets and (liability) consist of the following as of December 31:
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2015
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2014
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Deferred:
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|
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Net deferred tax asset and liabilities
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1,261,600
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1,216,700
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|
|
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Less reserve for allowance
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1,261,600
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1,216,700
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Total deferred tax assets and liabilities
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-
|
-
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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.
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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. As of December 31, 2015 and 2014, the Company had no warrants issued and outstanding.
Recent Authoritative Accounting Pronouncement
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 is intended to define managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact the adoption of ASU 2014-15 will have on its financial statements.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
NOTE 4 PROPERTY AND EQUIPMENT
Components of property and equipment are as follows: