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EX-32.1 - ARMADA ENTERPRISES LPex32-1.htm
EX-31.2 - ARMADA ENTERPRISES LPex31-2.htm
EX-31.1 - ARMADA ENTERPRISES LPex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2016

 

[  ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

COMMISSION FILE NUMBER: 000-55489

 

BIM Homes, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   47-4184146
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

c/o Legal & Compliance, LLC

330 Clematis Street, Suite 217

West Palm Beach

  33401
(Address of principal executive offices)   (Zip Code)

 

(646) 481-9677

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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. [X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [  ] No

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
   
Non-accelerated filer [  ] (Do not check if a smaller reporting company) 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). [X] Yes [  ] No

 

As of November 15, 2016, the registrant had 2,634,165 shares of common stock, par value $0.0001 per share, issued and outstanding.

 

 

 

   
 

 

BIM HOMES, INC.

INDEX

 

  Page
Part I. Financial Information  
     
  Item 1. Financial Statements 3
     
  Balance Sheets—September 30, 2016 (unaudited) and December 31, 2015 3
     
  Statements of Operations – Three and Nine Months Ended September 30, 2016 and 2015 (unaudited) 4
     
  Statements of Cash Flows – Nine Months Ended September 30, 2016 and 2015 (unaudited) 5
     
  Condensed Notes to Unaudited Financial Statements 6
     
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
     
  Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
     
  Item 4. Controls and Procedures 12
     
Part II. Other Information  
     
  Item 1. Legal Proceedings 12
     
  Item 1A. Risk Factors 12
     
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
     
  Item 3. Defaults Upon Senior Securities 12
     
  Item 4. Mine Safety Disclosures 12
     
  Item 5. Other Information 12
     
  Item 6. Exhibits 13
     
Signatures 14

 

 2 
 

 

PART 1 – FINANCIAL STATEMENTS

 

ITEM 1. FINANCIAL STATEMENTS

 

BIM HOMES, INC.

BALANCE SHEETS

 

   September 30, 2016   December 31, 2015 
   (Unaudited)     
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $-   $- 
Prepaid expenses   4,306    - 
           
TOTAL CURRENT ASSETS   4,306    - 
           
TOTAL ASSETS  $4,306   $- 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
CURRENT LIABILITIES:          
Accounts payable and accrued expenses  $686   $750 
Due to related party   468    - 
Related party convertible loans   -    13,140 
           
TOTAL CURRENT LIABILITIES   1,154    13,890 
           
STOCKHOLDERS' DEFICIT:          
Preferred stock, $.0001 par value, 20,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2016 and December 31, 2015   -    - 
Common stock, $.0001 par value, 100,000,000 shares authorized, 2,634,165 and 2,590,000 shares issued and outstanding at September 30, 2016 and December 31, 2015   264    259 
Additional paid-in capital   55,464    - 
Accumulated deficit   (52,576)   (14,149)
           
TOTAL STOCKHOLDERS' DEFICIT   3,152    (13,890)
           
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $4,306   $- 

 

The accompanying unaudited notes to the unaudited financial statements are an integral part of these statements.

 

 3 
 

 

BIM HOMES, INC.

STATEMENTS OF OPERATIONS

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2016   2015   2016   2015 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues  $-   $-   $-   $- 
                     
Operating Expenses:                    
Professional fees   21,838    1,500    38,423    6,100 
General and administrative   -    -    4    61 
                     
Total Operating Expenses   21,838    1,500    38,427    6,161 
                     
Loss from Operations   (21,838)   (1,500)   (38,427)   (6,161)
                     
Net Loss  $(21,838)  $(1,500)  $(38,427)  $(6,161)
                     
Net loss per common share, basic and diluted  $(0.01)  $(0.00)  $(0.01)  $(0.00)
                     
Weighted average number of common shares outstanding:                    
Basic and diluted   2,630,815    2,590,000    2,624,142    2,584,432 

 

The accompanying unaudited notes to the unaudited financial statements are an integral part of these statements.

 

 4 
 

 

BIM HOMES, INC.

STATEMENTS OF CASH FLOWS

 

   For the Nine Months Ended 
   September 30, 
   2016   2015 
   (Unaudited)   (Unaudited) 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(38,427)  $(6,161)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   4    1 
Changes in operating assets and liabilities:          
Prepaid expenses   (4,306)   - 
Accounts payable and accrued expenses   (64)   - 
           
NET CASH USED IN OPERATING ACTIVITIES   (42,793)   (6,160)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from exercise of warrants   24,990    - 
Proceeds from related party advances   15,202    - 
Repayment of related party advances   (14,734)   - 
Proceeds from related party loans   17,335    6,160 
           
NET CASH PROVIDED BY FINANCING ACTIVITIES   42,793    6,160 
           
NET INCREASE (DECREASE) IN CASH   -    - 
           
Cash, beginning of period   -    - 
           
Cash, end of period  $-   $- 
           
SUPPLEMENTAL DISCLOSURES:          
Interest paid  $-   $- 
Income taxes paid  $-   $- 
           
Non-Cash Investing and Financing Activities:          
Related party convertible loans cancelled and reclassified to paid-in capital  $30,475   $- 

 

The accompanying unaudited notes to the unaudited financial statements are an integral part of these statements.

 

 5 
 

 

BIM HOMES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2016

 

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

 

BIM Homes, Inc. (“the Company”, “we”, “us”, “our” or “the Issuer”) was organized under the laws of the State of Delaware on March 6, 2014. The Company was established as part of the Chapter 11 reorganization of Pacific Shores Development, Inc. (“PSD”). Under PSD’s Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the Southern District of California, the Company was incorporated to: (1) receive and own the interest which PSD had in a development business which focused on the construction of low cost homes; and (2) issue shares of its common stock to PSD’s general unsecured creditors and its administrative creditors. The Company has been in the development stage since its formation and has not yet realized any revenues from its planned operations. The Company is currently searching for business opportunities and is seeking an existing company which we could acquire, merge with, or joint venture with.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited financial statements for the three and nine months ended September 30, 2016 and 2015 have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of September 30, 2016 and 2015, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments.

 

Risks and uncertainties for development stage company

 

We are considered to be in the development stage as defined in the accounting standards since we have not commenced planned principal operations. Our activities since inception include devoting substantially all of our efforts to searching for business opportunities. Additionally, we have allocated a substantial portion of our time and investment to seeking an existing company which we could acquire, merge with or joint venture with. We have not yet generated any revenue from operations. The Company’s activities during the development stage are subject to significant risks and uncertainties.

 

Going concern

 

These unaudited financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.

 

As reflected in the accompanying unaudited financial statements, the Company had a net loss of $38,427 and $6,161 for the nine months ended September 30, 2016 and 2015, respectively, and net cash used in operations of $42,793 and $6,160 for the nine months ended September 30, 2016 and 2015, respectively, and an accumulated deficit and stockholders’ equity of $52,576 and $3,152, respectively, at September 30, 2016, and did not generate any revenue for the nine months ended September 30, 2016. These matters raise substantial doubt about the Company’s ability 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 raise additional capital, implement its business plan, and generate significant revenues. The Company has been funded by working advances from related parties. The Company’s future operations are dependent upon external funding and its ability to execute its business.

 

The unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company plans on raising capital through the sale of equity or debt instruments to implement its business plan. There is no assurance these plans will be realized.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and cash equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

 

 6 
 

 

BIM HOMES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2016

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Basic loss per common share

 

Basic income (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following:

 

   September 30, 2016   September 30, 2015 
Warrants   2,495,835    2,500,000 

 

Income tax

 

Deferred income tax assets and liabilities arise from temporary differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). Certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a “more-likely-than-not” threshold.

 

The Company does not believe it has any uncertain tax positions as of September 30, 2016 and 2015 that would require either recognition or disclosure in the accompanying unaudited financial statements.

 

Stock-based compensation

 

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

 

Recently issued accounting pronouncements

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited financial statements.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Related party convertible loans

 

During the nine months ended September 30, 2016 and during fiscal 2015, the former chief executive officer of the Company advanced a total of $17,335 and $13,140 to the Company to cover expenses, respectively. In connection with these advances, the Company issued the former chief executive officer convertible notes totaling $27,225 and the Company received additional advances of $3,250 during the three months ended June 30, 2016. These notes had a term of three years, non-interest bearing, and were convertible into one share of common stock per $0.01 of loan principal. On May 13, 2016, the former chief executive officer of the Company agreed to cancel all debt owed to him. In connection with this cancellation, the cancelled debt was reflected as a contribution of capital by the former officer and accordingly, reduced the loan amounts due by $30,475 and increased paid-in capital by $30,475. At September 30, 2016 and December 31, 2015 convertible notes – related party amounted to $0 and $13,140, respectively.

 

 7 
 

 

BIM HOMES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2016

 

NOTE 3 – RELATED PARTY TRANSACTIONS (continued)

 

Due to related party

 

Effective June 17, 2016, certain stockholders and warrant holders of the Company sold an aggregate of 2,495,000 shares of the Company’s common stock and warrants to purchase 2,500,000 shares of the Company’s common stock, resulting in a change of control of the Company. Armada Enterprises GP, LLC (“Armada”) purchased 2,000,000 shares of common stock, representing 76.0% of the Company’s outstanding common stock, and 2,005,000 warrants to purchase shares of common stock in these transactions. The Company’s chief executive officer, Milan Saha serves as Armada’s Chief General Counsel. During the nine months ended September 30, 2016, Armada advanced the Company $15,202 for working capital purposes and the Company repaid Armada $14,734. The advances bear no interest, are unsecured and are payable on demand. At September 30, 2016, the Company owed Armada $468 which is reflected as due to related party on the accompanying balance sheet.

 

NOTE 4 – STOCKHOLDERS’ DEFICIT

 

As of September 30, 2016, the authorized share capital of the Company consisted of 100,000,000 shares of common stock with $0.0001 par value per share, and 20,000,000 shares of preferred stock also with $0.0001 par value per share. No other classes of stock are authorized.

 

Preferred stock

 

The Company has authorized 20,000,000 shares of preferred stock with $0.0001 par value per share. As of September 30, 2016 no shares of preferred stock are issued and outstanding.

 

Common stock

 

On February 11, 2016 the Company issued a total of 40,000 restricted shares of its common stock to five individuals: 20,000 restricted shares of its common stock to Konstantin Zecevic; 5,000 restricted shares of its common stock to Frances Munro; 5,000 restricted shares of its common stock to Joseph LeBlanc; 5,000 restricted shares of its common stock to Gluten Balaban Ugandan; and 5,000 restricted shares of its common stock to Muzeyyen Balaban. All of these issuances were for services valued at a nominal value of $0.0001 per share.

 

On September 12, 2016, the Company issued 4,165 shares of its common stock upon exercise of 4,165 warrants for cash proceeds of $24,990.

 

Warrants

 

On August 19, 2016, the Company entered into a series of warrant amendment agreements (collectively, the “Warrant Amendments”) in order to extend the expiration date of certain outstanding warrants from August 30, 2016 to August 30, 2017. The Company analyzed the incremental value of the modified warrants as compared to the original warrant value, both valued as of the modification date, The Company determined there was no warrant modification expense as the warrants had nominal value. The warrants subject to the term extension were valued using the Black-Scholes Option Pricing Model and the following weighted average assumptions:

 

Assumption:  Pre- modification    Post- modification 
Market price per share  $0.01   $0.01 
Average exercise price per share  $6.00   $6.00 
Risk-free interest rate   0.20%   0.59%
Remaining contractual term in years   0.03    1.03 
Volatility   100.0%   100.0%
Dividend rate   0.0%   0.0%
Fair Value per share  $0.00   $0.00 

 

Warrant activities for the nine months ended September 30, 2016 are summarized as follows:

 

   Number of
Warrants
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Term (Years)
   Aggregate
Intrinsic
Value
 
Balance Outstanding December 31, 2015   2,500,000   $6.00    -   $- 
Granted   -    -    -    - 
Exercised   (4,165)   6.00    -    - 
Balance Outstanding September 30, 2016   2,495,835   $6.00    0.92   $- 
                     
Exercisable, September 30, 2016   2,495,835   $6.00    0.92   $- 

 

 8 
 

 

BIM HOMES, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2016

 

NOTE 5 – CONCENTRATIONS

 

The Company has relied on related party working capital loans and advances to fund its operations.

 

NOTE 6 – SUBSEQUENT EVENTS

 

On October 1, 2016, the Company entered into a revolving line of credit agreement (the “Line of Credit”) with Deonarayan P. Saha, the father of the Company’s chief executive officer (the “Lender”). The Lender established a revolving line of credit in the Company’s favor in the amount of Twenty Thousand Dollars ($20,000), in the form of approved charges on two of the Lender’s credit cards. The Lender may cancel either or both of these credit cards at any time. At any time that the Company desires the Lender make a charge against a credit card, the Company may request the same, and the Lender for any or no reason may deny such request. The line of credit advances made will not bear interest if the Company pays off the balance on the credit cards when a monthly payment is due, and the Company will pay the interest on the credit cards on the amount of any unpaid balance on the credit cards for the Company’s charges against the credit cards. Through November 10, 2016, the Company borrowed approximately $14,807 under this Line of Credit and repaid $14,807.

 

On November 4, 2016, the Company entered into a 12% convertible promissory note payable (the “Convertible Note”) with a principal amount of $100,000. Principal and all accrued interest payable is due on November 4, 2017. The holder of the Convertible Note has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Convertible Note into the common stock of the Company at 25% of the average of the lowest three trading day prices for the common stock during the ten trading days prior to the conversion date. Additionally, upon the conversion of the Convertible Note, the Company shall issue to the holder on the conversion date a number of additional shares of common stock equal to (i) 10% of the principal amount converted divided by (ii) the lower of (a) $1.00 or (b) the average of the lowest three trading prices for the common stock during the ten trading day period prior to the conversion date. The Company shall have no right of prepayment. The Convertible Note is secured by all of the Company’s assets and is guaranteed by Armada Enterprises GP, LLC, the majority shareholder of the Company. In accordance with FASB ASC Topic No. 815, the embedded conversion option does not meet the definition of a derivative since the common shares underlying the conversion option are not readily convertible to cash because there is an inactive market for the Company’s common stock.

 

On October 28, 2016, the Company’s board of directors approved of a plan for conversion of the Company from a corporation to a publicly traded limited partnership. It is anticipated that the Company, upon becoming a publicly traded limited partnership, will be managed by Armada Enterprises GP, LLC, a Delaware limited liability company (currently the majority shareholder of the Company), as the Company’s general partner. The Company has begun implementation of its plans to convert the Company from a corporation to a publicly traded limited partnership.

 

 9 
 

 

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2015.

 

FORWARD-LOOKING STATEMENTS

 

The discussion contained herein contains “forward-looking statements” that involve risk and uncertainties. These statements may be identified by the use of terminology such as “believes,” “expects,” “may,” “should” or anticipates” or expressing this terminology negatively or similar expressions or by discussions of strategy. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. Our actual results could differ materially from those discussed in this report.

 

Business and Plan of Operation

 

BIM Homes, Inc. (“the Company” or “the Issuer”) was organized under the laws of the State of Delaware on March 6, 2014 as part of the implementation of the Chapter 11 plan of reorganization of Pacific Shores Development, Inc. (“PSD”). PSD had been in the residential real estate development business and the predecessor of the issuer was a subsidiary of PSD engaged in the development of low cost single family homes on in-fill lot sites. Under PSD’s Plan of Reorganization the Company was incorporated to: (1) receive and own the interest which PSD had in the development business which focused on the construction of low cost homes; and (2) issue shares of its common stock to PSD’s general unsecured creditors and its administrative creditors. While it remains possible that management will find opportunities for the Company in the low cost residential construction industry, management is currently engaged in a search for a business to enter or an existing company which it can acquire, merge with, or joint venture with, and this search is not limited to the real estate development and construction industry.

 

Results of Operations

 

The Company has not yet realized any revenues or earnings from operations however, as noted above, it incurs ongoing expenses related to its SEC registration and status as a reporting issuer. We will, in all likelihood, continue to sustain operating expenses without corresponding revenues, at least until we can complete a business combination with another company.

 

Going Concern

 

The accompanying unaudited financial statements are presented on a going concern basis. The company’s financial condition raises substantial doubt about the Company’s ability to continue as a going concern. The Company has no cash and no other material assets and it has no operations or revenues from operations. It is relying on advances from officers, directors, related parties and third parties to meet its limited operating expenses.

 

Liquidity and Capital Resources

 

As of September 30, 2016, we had $4,306 in assets, $1,154 in liabilities and an accumulated deficit of $52,576. As of December 31, 2015 we had no assets and we had liabilities totaling $13,890 and we had an accumulated deficit of $14,149. Our only expenses during the nine months ended September 30, 2016 were for professional, and general and administrative expenses which totaled $38,427. We had no revenues during the period. We will, in all likelihood, sustain continued operating expenses without corresponding revenues, at least until we can complete a business combination with another company.

 

We will continue to depend upon shareholders, officers, and directors to make loans to the Company to meet any costs that may occur. All such advances will be interest-free.

 

During the nine months ended September 30, 2016, working capital loans from our former chief executive officer amounted to $17,335. On May 13, 2016, the former chief executive officer of the Company agreed to cancel all debt owed to him. In connection with this cancellation, the cancelled debt was reflected as a contribution of capital by the former officer and accordingly, reduced the loan amounts due by $30,475 and increased paid-in capital by $30,475.

 

During the nine months ended September 30, 2016, Armada Enterprises GP, LLC (“Armada”), our majority shareholder, advanced the Company $15,202 for working capital purposes and the Company repaid Armada $14,734. The advanced bear no interest, are unsecured and are payable on demand, At September 30, 2016, we owed Armada $468 which is reflected as due to related party on the accompanying balance sheet.

 

On October 1, 2016, we entered into a revolving line of credit agreement (the “Line of Credit”) with Deonarayan P. Saha, the father of the Company’s chief executive officer (the “Lender”). The Lender established a revolving line of credit in our favor in the amount of $20,000, in the form of approved charges on two of the Lender’s credit cards. The Lender may cancel either or both of these credit cards at any time. At any time that we desire the Lender make a charge against a credit card, we may request the same, and the Lender for any or no reason may deny such request. The line of credit advances made will not bear interest if we pay off the balance on the credit cards when a monthly payment is due, and we will pay the interest on the credit cards on the amount of any unpaid balance on the credit cards for our charges against the credit cards. Through November 10, 2016, we borrowed approximately $14,807 under this Line of Credit and repaid $14,807.

 

 10 
 

 

On November 4, 2016, we entered into a 12% convertible promissory note payable (the “Convertible Note”) with a principal amount of $100,000. Principal and all accrued interest payable is due on November 4, 2017. The holder of the Convertible Note has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Convertible Note into the common stock of the Company at 25% of the average of the lowest three trading day prices for the common stock during the ten trading days prior to the conversion. Additionally, upon the conversion of the Convertible Note, we shall issue to the holder on the conversion date a number of additional shares of common stock equal to (i) 10% of the principal amount converted divided by (ii) the lower of (a) $1.00 or (b) the average of the lowest three trading prices for the common stock during the ten trading day period prior to the conversion date. We shall have no right of prepayment. The Convertible Note is secured by all of the Company’s assets and is guaranteed by Armada Enterprises GP, LLC, the majority shareholder of the Company. Pursuant to ASC Topic 470-20-525 (Debt with conversion and other options), since this convertible note had fixed conversion percentages of 25% of the stock price, we determined it had a fixed maximum amounts that can be settled for the debt. Accordingly, on November 4, 2016, we recorded an embedded conversion option liability amounting to $300,000 since the Convertible Note is convertible for the conversion premium and recorded interest expense of $300,000. Upon conversion, the embedded conversion option liability of will be reclassified to additional paid-in capital.

 

Contractual Obligations and Off-Balance Sheet Arrangements

 

Contractual Obligations

 

As of September 30, 2016, we have no fixed contractual obligations and commitments that include future estimated payments.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations are based upon our audited and unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the unaudited financial statements.

 

Stock-based compensation

 

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We initially record compensation expense based on the fair value of the award at the reporting date.

 

Recent Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to smaller reporting companies.

 

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ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective for the same reasons that our internal control over financial reporting were not adequate.

 

Internal Control Over Financial Reporting

 

As indicated in our Form 10-K filed on March 11, 2016, our Principal Executive Officer and Principal Financial Officer concluded that our internal control over financial reporting was not effective during the 2015 fiscal year at the reasonable assurance level, as a result of a material weakness primarily related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, or GAAP.

 

We are currently in the process of evaluating the steps necessary to remediate this material weakness.

 

Changes in Internal Control

 

There was no change in our internal control over financial reporting that occurred during the quarterly period ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

Not required of smaller reporting companies

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On September 12, 2016, the Company issued 4,165 shares of its common stock upon exercise of 4,165 warrants for cash proceeds of $24,990.

 

The foregoing share issuance was made in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), under Regulation D and Section 4(2) of the Securities Act.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Potential Limited Partnership Conversion

 

The Company’s board of directors has approved of a plan for conversion of the Company from a corporation to a publicly traded limited partnership. It is anticipated that the Company, upon becoming a publicly traded limited partnership, will be managed by Armada Enterprises GP, LLC, a Delaware limited liability company (currently the majority shareholder of the Company), as the Company’s general partner. The Company has begun implementation of its plans to convert the Company from a corporation to a publicly traded limited partnership.

 

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ITEM 6. - EXHIBITS

 

Exhibit No.   Description
     
31.1*   Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer
31.2*   Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer
32.1*   Section 1350 Certificate of Chief Executive Officer and Chief Financial Officer
     
101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema
101.CAL*   XBRL Taxonomy Extension Calculation
101.DEF*   XBRL Taxonomy Extension Definition
101.LAB*   XBRL Taxonomy Extension Labels
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase
     
*   Filed herewith.

 

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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.

 

 

BIM Homes, Inc.

(Registrant)

   
Date: November 16, 2016 /s/ Milan Saha
  Milan Saha
  Chief Executive Officer
   
Date: November 16, 2016 /s/ Milan Saha
  Milan Saha
  Chief Financial Officer

 

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