Attached files
| file | filename |
|---|---|
| EX-32.1 - ARMADA ENTERPRISES LP | ex32-1.htm |
| EX-31.2 - ARMADA ENTERPRISES LP | ex31-2.htm |
| EX-31.1 - ARMADA ENTERPRISES LP | ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING SEPTEMBER 30, 2017
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-55489
ARMADA ENTERPRISES, LP
(Formerly known as 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.) |
| 40 Wall Street, 28th Floor, | ||
| New York, New York | 10005 | |
| (Address of principal executive offices) | (Zip Code) |
(646) 481-9671
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, $0.0001 par value |
OTC QB | |
| (Title of each class) | (Name of Exchange on which Registered) |
Securities Registered Pursuant to Section 12(g) of the Act:
None
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] |
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [X] Yes [ ] No
The aggregate market value of Armada Enterprises, LP common stock held by non-affiliates of Armada Enterprises, LP as of the last business day of Armada Enterprises, LP most recently completed three month period (September 30, 2017) was approximately $0.00 (based on lack of any trade or posted price reported by OTC on or prior to September 30, 2017). For this purpose, all of Armada Enterprises GP, LLC members were assumed to be affiliates of Armada Enterprises, LP.
As of November 20, 2017, the registrant had 2,634,165 shares of common stock, par value $0.0001 per share, issued and outstanding, with a further 210,000,000 committed to be issued upon receiving FINRA approval for the conversion of BIM Homes, Inc. to Armada Enterprises, LP, and all issued and outstanding shares of common stock will be converted into LP Units on a 1:1 basis.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
ARMADA ENTERPRISES, LP
(Formerly known as BIM Homes, Inc.)
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS AND NINE MONTHS ENDING SEPTEMBER 30, 2017
INDEX
| 2 |
Armada Enterprises, LP
(Formerly known as BIM Homes, Inc.)
| Notes | As at September 30, 2017 | As at December 31, 2016 | ||||||||
| (Unaudited) | ||||||||||
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | 2 | $ | - | $ | - | |||||
| Total current assets | - | - | ||||||||
| TOTAL ASSETS | $ | - | $ | - | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable, trade | $ | 15,347 | $ | 17,115 | ||||||
| Accrued expenses and other current liabilities | 251,684 | 9,529 | ||||||||
| Loans and convertible notes payable, short-term, net of unamortized debt discount of $9,247 and $84,000, respectively. | 6 | 101,620 | 17,867 | |||||||
| Advance from related parties | 8 | 20,845 | - | |||||||
| Derivative liability | 7 | 330,244 | 332,249 | |||||||
| Total current liabilities | 719,740 | 376,760 | ||||||||
| TOTAL LIABILITIES | 719,740 | 376,760 | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||||
| Preferred stock: $0.0001 par value, 20,000,000 shares authorized, nil shares issued and outstanding as at September 30, 2017 and December 31, 2016 | 5 | - | - | |||||||
| Common stock: $0.0001 par value, 100,000,000 shares authorized, 2,634,165 shares issued and outstanding as at September 30, 2017 and December 31, 2016 | 5 | 264 | 264 | |||||||
| Additional paid-in capital | 1,746,359 | 55,464 | ||||||||
| Accumulated deficit | (2,466,363 | ) | (432,488 | ) | ||||||
| TOTAL STOCKHOLDER’S DEFICIT | (719,740 | ) | (376,760 | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | - | $ | - | ||||||
See accompanying notes to these unaudited condensed financial statements
| 3 |
Armada Enterprises, LP
(Formerly known as BIM Homes, Inc.)
Condensed Statement of Operations
(Unaudited)
| For the Three Months Ending September 30, | For the Nine Months Ending September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating expenses | 253,489 | 21,838 | 261,203 | 38,427 | ||||||||||||
| Total operating expenses | 253,489 | 21,838 | 261,203 | 38,427 | ||||||||||||
| Loss from operations | (253,489 | ) | (21,838 | ) | (261,203 | ) | (38,427 | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Financing costs | (3,000 | ) | - | (9,029 | ) | - | ||||||||||
| Gain on change in fair value of derivative liability on debt | 178 | - | 2,005 | - | ||||||||||||
| Revaluation of warrants | (1,690,895 | ) | - | (1,690,895 | ) | - | ||||||||||
| Amortization of debt discount | (25,205 | ) | - | (74,753 | ) | - | ||||||||||
| Loss before provision for income tax | (1,972,411 | ) | (21,838 | ) | (2,033,875 | ) | (38,427 | ) | ||||||||
| Provision for income tax | - | - | - | - | ||||||||||||
| Net loss | (1,972,411 | ) | (21,838 | ) | $ | (2,033,875 | ) | $ | (38,427 | ) | ||||||
| Net loss per common share | ||||||||||||||||
| Basic and diluted | (0.75 | ) | (0.01 | ) | $ | (0.77 | ) | $ | (0.01 | ) | ||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic and diluted | 2,634,165 | 2,630,815 | 2,634,165 | 2,624,142 | ||||||||||||
See accompanying notes to these unaudited condensed financial statements.
| 4 |
Armada Enterprises, LP
(Formerly known as BIM Homes, Inc.)
Condensed Statement of Changes in Stockholders’ Deficit
For the Nine Months Ending September 30, 2017
(Unaudited)
| Shares of Common Stock | Common Stock Value |
Additional Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||
| Balance brought forward as at January 1, 2017 | 2,634,165 | $ | 264 | $ | 55,464 | $ | (432,488 | ) | $ | (376,760 | ) | |||||||||
| Loss on modification of warrants | - | - | 1,690,895 | - | 1,690,895 | |||||||||||||||
| Net loss for period ending September 30, 2017 | - | - | - | (2,033,875 | ) | (2,033,875 | ) | |||||||||||||
| Balance carried forward as at September 30, 2017 | 2,634,165 | $ | 264 | $ | 1,746,359 | $ | (2,466,363 | ) | $ | (719,740 | ) | |||||||||
See accompanying notes to these unaudited condensed financial statements.
| 5 |
Armada Enterprises, LP
(Formerly known as BIM Homes, Inc.)
Condensed Statement of Cash Flow
(Unaudited)
| For the Nine Months ending September 30, 2017 |
For the Nine Months ending September 30, 2016 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (2,033,875 | ) | $ | (38,427 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Common stock issued for compensation | - | 4 | ||||||
| Amortization of debt discount | 74,753 | - | ||||||
| Gain on change in fair value derivative liability | (2,005 | ) | - | |||||
| Revaluation of warrants | 1,690,895 | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | - | (4,306 | ) | |||||
| Accounts payable and accrued expenses | 249,387 | (64 | ) | |||||
| NET CASH USED IN OPERATING ACTIVITIES | (20,845 | ) | (42,793 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from exercise of warrants | - | 24,990 | ||||||
| Proceeds from related party advances | - | 15,202 | ||||||
| Proceeds from convertible note issuance | - | 17,335 | ||||||
| Proceeds from (repayment of) related party advance | 20,845 | (14,734 | ) | |||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 20,845 | 42,793 | ||||||
| NET INCREASE (DECREASE) IN CASH | - | - | ||||||
| Cash, beginning of year | - | - | ||||||
| Cash, end of year | $ | - | $ | - | ||||
| SUPPLEMENTAL DISCLOSURES: | ||||||||
| Related party convertible loans cancelled and reclassified to paid-in capital | $ | - | $ | 30,475 | ||||
| Interest paid | $ | - | $ | - | ||||
| Income taxes paid | $ | - | $ | - | ||||
See accompanying notes to these unaudited condensed financial statements.
| 6 |
Armada Enterprises, LP
(Formerly known as BIM Homes, Inc.)
Notes to Unaudited Condensed Financial Statements
For the Nine Months Ending September 30, 2017 and 2016
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
BIM Homes, Inc. (“the Company” 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.
Effective June 17, 2016, certain stockholders and warrant holders of BIM Homes, Inc. (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 GP”), having purchased 2,000,000 of the 2,630,000 shares outstanding as of June 17, 2016 became the controlling shareholder of the Company.
Effective July 6, 2016, the Company’s existing officers and directors resigned and Armada GP appointed its general counsel, Milan Saha, to be the Company’s Chief Executive Officer, President, Secretary, Treasurer and sole director.
On October 28, 2016, the Company’s board of directors approved 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.
On July 14, 2017, the Company filed a definitive Proxy Statement, outlining the proposed conversion of the Company into a Limited Partnership, the change of name of the Company to Armada Enterprises, LP and, on successful completion of this proposed conversion and name change, the contribution of certain assets from Armada Enterprises, GP, LLC in exchange for Armada Enterprises, LP Units. The conversion and name change were subject to a shareholder vote, which was required to be unanimous, and was completed on October 11, 2017. Final FINRA approval for the change has not yet been received. On approval being granted, all shares currently outstanding will be converted into LP Units on a 1:1 basis, and all references to shares will be changed to LP Interests.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements as of September 30, 2017 have been prepared in accordance with the U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position as of September 30, 2017, the Company’s results of operation and the cash flows for the nine months ended September 30, 2017. These condensed financial statements should be read in conjunction with the audited financial statements included in the Company’s Form 10-K filed on May 19, 2017. The December 31, 2016 condensed balance sheet data was derived from the audited financial statements included in the Form 10-K filed on May 19, 2017. The financial statements and notes are representations of the Company’s management (“Management”) and its board of directors (the “Board of Directors”), who are responsible for their integrity and objectivity.
Results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017 or any other future period.
| 7 |
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For the Balance Sheet and Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. The Company had no cash equivalents as of September 30, 2017.
Income Taxes
Income taxes are provided in accordance with the FASB Accounting Standards (ASC 740), Accounting for Income Tax. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Basic and Diluted Net Loss per Share
Net loss per share is calculated in accordance with Codification topic 260, “Earnings per Share” for the periods presented. Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share has not been presented because the common stock equivalents resulting from the issuance of these convertible notes have not been included in the per share calculations because such inclusion would be anti-dilutive. Diluted earnings loss per share is based on the assumption that all dilutive stock options, warrants, and convertible debt are converted or exercised applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during periods of net profit, only when the average market price of the common stock during the period exceeds the exercise or conversion price of the items.
Stock Based Compensation
Codification topic 718 “Stock Compensation” requires that the cost resulting from all share-based transactions be recorded in the financial statements and establishes fair value as the measurement objective for share-based payment transactions with employees and acquired goods or services from non-employees. The codification also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. The Company adopted the codification upon creation of the Company and will expense share based costs in the period incurred. The Company has not adopted a stock option plan or completed a share-based transaction; accordingly no stock-based compensation has been recorded to date.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.
Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instruments are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”.
| 8 |
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.
ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability.
Fair Value of Financial Instruments
We adopted the guidance of ASC-820 for fair value instruments, which clarifies the definition of fair value, prescribes methods for determining fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value, as follows:
| Level 1 – | Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. |
| Level 2 – | Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
| Level 3 – | Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. |
The carrying amounts for cash, accounts receivable, accounts payable and accrued expenses, and loans payable approximate their fair value based on the short-term maturity of these instruments. We did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with the accounting guidance.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. We did not elect to apply the fair value option to any outstanding instruments.
Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of September 30, 2017, which consist of convertible instruments and rights to shares of the Company’s common stock, and determined that such derivatives meet the criteria for liability classification under ASC 815.
| 9 |
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirement of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.
Impact of New Accounting Standards
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.
NOTE 3. GOING CONCERN
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The Company has no significant operating history and had a cumulative net loss from inception to September 30, 2017 of $2,466,363. The Company has a working capital deficit of $719,740 as of September 30, 2017. The accompanying financial statements for the period ending September 30, 2017, have been prepared assuming the Company will continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
The president has committed to advancing certain operating costs of the Company. The Company’s future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives including anticipated cash needs for working capital for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation, or if obtained, upon terms favorable to the Company.
NOTE 4. STOCK WARRANTS
On March 6, 2014 (inception), the Company issued 2,500,000 warrants exercisable into 2,500,000 shares of the Company’s common stock. These warrants were issued per order of the U.S. Bankruptcy Court to the administrative creditors of PSD. These creditors received an aggregate of 2,500,000 warrants issued in the series and exercise prices as set forth below:
| Warrant Class | Number Issued | Exercise Price | Expiry Date | |||||||
| A | 500,000 | $ | 4.00 | August 30, 2016 | ||||||
| B | 500,000 | $ | 5.00 | August 30, 2016 | ||||||
| C | 500,000 | $ | 6,00 | August 30, 2016 | ||||||
| D | 500,000 | $ | 7.00 | August 30, 2016 | ||||||
| E | 500,000 | $ | 8.00 | August 30, 2016 | ||||||
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:
| 10 |
| 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 | ||||
On September 12, 2016, the Company issued 4,165 shares of its common stock upon exercise of 4,165 class C warrants for cash proceeds of $24,990.
On August 29, 2017, 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 (collectively, the “Warrants”) from August 30, 2017 to August 30, 2020. 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 the following warrant modification expense using the Black-Scholes Option Pricing Model and the following weighted average assumptions:
| Assumption | Pre- Modification |
Post-Modification | ||||||
| Market price per share | $ | 6.00 | $ | 6.00 | ||||
| Average exercise price per Share | $ | 6.00 | $ | 6.00 | ||||
| Risk-free interest rate | 2.16 | % | 2.16 | % | ||||
| Remaining contractual term in years | 0.00 | 3.00 | ||||||
| Volatility | 23.4 | % | 23.4 | % | ||||
| Dividend rate | 0.0 | % | 0.0 | % | ||||
| Fair value per share | $ | 0.61 | $ | 1.28 | ||||
The total incremental value of the modified warrants resulted in a warrant modification expense of $1,690,895 charged to the Company’s Income Statement for the period ending September 30, 2017.
The following table summarizes the warrants outstanding and the related prices for the shares of the Company’s common stock at September 30, 2017:
| 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 | 0.66 | $ | - | ||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | (4,165 | ) | 6.00 | 0.63 | - | |||||||||||
| Cancelled | - | - | - | - | ||||||||||||
| Balance outstanding December 31, 2016 | 2,495,835 | $ | 6.00 | 0.66 | $ | - | ||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Cancelled | - | - | - | - | ||||||||||||
| Balance outstanding September 30, 2017 | 2,495,835 | $ | 6.00 | 2.92 | $ | - | ||||||||||
| Exercisable, September 30, 2017 | 2,495,835 | $ | 6.00 | 2.92 | $ | - | ||||||||||
| 11 |
NOTE 5. COMMON STOCK AND PREFERRED STOCK
As of September 30, 2017 the authorized share capital of the Company consisted of 100,000,000 shares of common stock with $0.0001 par value and 20,000,000 shares of preferred stock also with $0.0001 par value. No other classes of stock are authorized. On final approval by FINRA of the conversion of BIM Homes, Inc. to Armada Enterprises, LP, the preferred stock will be canceled and all shares of common stock will convert into LP Units on a 1:1 basis.
Common Stock
As of September 30, 2017 and December 31, 2016 there were a total of 2,634,165 common shares issued and outstanding.
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 Gulten Balaban Umancan; and 5,000 restricted shares of its common stock to Muzeyyen Balaban. All of these issuances were for services at par value of $0.0001 per share. We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuances. We believed that Section 4(2) was available because:
- The issuance involved no underwriter, underwriting discounts or commissions;
- We placed restrictive legends on all certificates issued;
- No sales were made by general solicitation or advertising;
- Sales were made only to accredited investors who are Company officers.
In connection with the above transactions, we provided the following to the investor:
- Access to all our books and records.
- Access to all material contracts and documents relating to our operations.
- The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.
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.
As a result of these issuances there were a total 2,634,165 common shares issued and outstanding, and a total of 2,495,835 warrants to acquire common shares issued and outstanding, as at September 30, 2017 and December 31, 2016.
Preferred Stock
The authorized share capital of the Company includes 20,000,000 shares of preferred stock with $0.0001 par value. As of September 30, 2017 and December 31, 2016 no shares of preferred stock had been issued or outstanding.
NOTE 6. LOANS AND CONVERTIBLE NOTES PAYABLE
Line of credit
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. All monies borrowed through this facility were repaid by the year end.
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Convertible Note Payable
During the year ended December 31, 2015 the then President advanced a total of $13,140 to the Company to cover expenses and the Company issued the President three convertible notes. During the year ended December 31, 2016, the President advanced a further $17,335 to the Company to cover expenses and the Company issued the President a further convertible note. All four convertible notes were canceled by the Company on May 13, 2016, resulting in an increase in Additional paid-in capital of $30,475.
As at September 30, 2017, the Company had one convertible loan note outstanding with a repayment date of November 4, 2017. The principal amount of the loan note was $100,000, received on November 4, 2016, and the note has an annual interest rate of 12%, to be applied to the outstanding principal sum. Including accrued interest of $10,867, the amount outstanding as at September 30, 2017 was $110,867. The note is convertible at the holders’ election, into shares of Common Stock at a 75% discount to the Market Price, where Market Price is defined as the average of the lowest three (3) days’ trading prices for the Common Stock during the ten (10) Trading Day period ending one Trading Day prior to the Conversion Date. This conversion right exists from the issue date of November 4, 2016 until the later of (i) the Maturity Date of November 4, 2017, and (ii) the date of payment of the outstanding principal and all accrued and unpaid interest, and can be applied in whole or in part to the amount outstanding at the point of conversion. The Note also provides for an equity kicker allowing conversion of up to an additional 10% of the principal amount at the higher of (i) the same conversion price and (ii) $1.00 per share, with the same calculation used to determine Market Price as described above. The initial fair value of the beneficial conversion feature relating to this convertible loan was $331,973 using the Black Scholes method at the date of the grant of conversion rights and based on the following assumptions: (1) risk-free interest rate of 1.81%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our Common Stock of 31.91%; (4) an expected life of the beneficial conversion feature of 1 year and (5) in the absence of an active market for the Company’s Common Stock, a stock price of $6.00 per share based on the price of the warrants exercised on September 12, 2016.
During the nine months ended September 30, 2017 and 2016, the Company amortized the debt discount of $74,753 and $0 to operations as interest expense, respectively.
During the three months ended September 30, 2017 and 2016, the Company amortized the debt discount of $25,205 and $0 to operations as interest expense, respectively.
NOTE 7. DERIVATIVE LIABILITIES
The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price (reset provisions), may not be exempt from derivative accounting treatment. As a result, embedded conversion options in convertible debt are recorded as a liability and are revalued at fair value at each reporting date. If the fair value of the note exceeds the face value of the related debt, the excess is recorded as change in fair value in operations on the issuance date.
The Company identified embedded derivatives related to the Convertible Promissory Note issued in November 2016. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $331,973 for the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:
| Dividend yield: | 0.00 | % | ||
| Volatility | 31.91 | % | ||
| Risk free rate: | 1.81 | % |
The initial fair values of the embedded debt derivative $100,000 was allocated as a debt discount up to the proceeds of the note with the remainder $231,973 charged to operations for the year ended December 31, 2016 as interest expense.
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The following table provides a summary of changes in fair value of the Company’s Level 3 derivative liabilities for the period ending September 30, 2017 and year ended December 31, 2016:
| September 30, 2017 | December 31, 2016 | |||||||
| Balance, beginning of period | $ | 332,249 | $ | - | ||||
| Additions | - | 331,973 | ||||||
| Mark-to-market at modification date | (2,005 | ) | 276 | |||||
| Reclassified to additional paid in capital upon modification of term | - | - | ||||||
| Balance closing | $ | 330,244 | $ | 332,249 | ||||
| Net gain (loss) due to change in fair value included in statement of operations | $ | 2,005 | $ | (276 | ) | |||
NOTE 8. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2015 the then President advanced a total of $13,140 to the Company to cover expenses and the Company issued the President three convertible notes. During the year ended December 31, 2016, the President advanced a further $17,335 to the Company to cover expenses and the Company issued the President a further convertible note. All four convertible notes were canceled by the Company on May 13, 2016.
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 GP”) 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, also serves as Armada GP’s Chief General Counsel. During the year ending December 31, 2016, Armada GP advanced the Company $15,202 for working capital purposes which was repaid. The advances bore no interest, were unsecured and were repayable on demand.
In February 2017, the President advanced a sum of $106 to the Company as a short-term advance. This amount attracts no interest and will be repaid when the Company receives additional cash.
Between April 1, 2017 and June 30, 2017, the President advanced a sum of $19,074 to the Company as a short-term cash advance. This amount attracts no interest and will be repaid when the Company receives additional cash.
Between July 1, 2017 and September 30, 2017, the President advanced a sum of $1,665 to the Company as a short-term cash advance. This amount attracts no interest and will be repaid when the Company receives additional cash.
During the period ending September 30, 2017, professional and consulting fees totaling $250,000 were accrued as an expense in the Company’s Income Statement for services provided up to and including September 30, 2017 by affiliates of the Company. None of these amounts has yet been paid and the Company reserves the right to pay these in future in cash or in stock, as agreed with each individual.
NOTE 9. COMMITMENT AND CONTINGENCY
There is no commitment or contingency to disclose during the period ending September 30, 2017.
NOTE 10. SUBSEQUENT EVENTS
There were several significant events occurring after September 30, 2017:
| - | On October 11, 2017, we received the final affirmations to complete a 100% vote of shareholders to execute the Plan of Conversion to convert BIM Homes, Inc. from a Delaware corporation to a Delaware limited partnership called “Armada Enterprises, LP.” The Certificate of Conversion and Certificate of Limited Partnership for Armada Enterprises, LP were filed with the Delaware Secretary of State Division of Corporations effective October 16, 2017. Upon effectiveness of these filings, the Registrant’s governance structure changed such that it will be managed by a general partner, and pursuant to the Plan of Conversion, the controlling shareholder is now the General Partner. As part of this conversion, all common stock in BIM Homes, Inc. will be converted into Limited Partnership Units (“LP Units”) and all preferred stock in BIM Homes, Inc. will be canceled upon final approval of the conversion from FINRA. |
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| - | Effective October 17, 2017, an Agreement of Limited Partnership was executed between the Registrant’s CEO, Milan Saha, on behalf of its shareholders who are the initial limited partners of Registrant limited partnership and the Registrant limited partnership’s new general manager, Armada Enterprises GP, LLC, who is also the Registrant’s majority shareholder. The Agreement of Limited Partnership was executed as disclosed in the Registrant shareholder consent solicitation for the Plan of Conversion. |
| Execution of the Agreement of Limited Partnership was the last act of the Registrant’s CEO pursuant to his resignation from being the Registrant’s Sole Director, President, and CEO. The Registrant limited partnership executed a separation agreement with Mr. Saha for his service in effecting the conversion. Mr. Saha will continue to serve as General Counsel for Armada Enterprises GP, LLC, (“General Partner” or “GP”). | |
| - | Effective October 18, 2017, we executed a services agreement with the General Partner, pursuant to which the GP will provide certain services to the limited partnership, including certain executive, general and administrative services, including but not limited to legal, accounting, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit, taxes and engineering. As consideration for the services provided under the Services Agreement, the limited partnership has agreed to pay to the General Partner a fee of 2% of the partnership’s operating surplus. In addition, the limited partnership will reimburse the General Partners for its expenses in connection with the services provided under the Services Agreement. The Services Agreement was executed as disclosed in the Registrant’s shareholder consent solicitation. |
| - | On November 4, 2017, the holders of the convertible loan note (the “Note”), Janet and Stephen Silverman, agreed to (i) extend the maturity date of the Note from November 4, 2017 to March 31, 2018; (ii) amend the interest rate from 12% to 18% while the Note remains outstanding; and (iii) set the conversion price at $2.50 per share, which is a 75% discount from the Company’s proposed S-1 registered offering price. |
| - | On November 6, 2017, the Registrant, as the final step of its Plan of Conversion, approved by 100% of its shareholders, executed a Contribution, Conveyance, Assumption Agreement (the “Contribution Agreement”) with its general partner, Armada Enterprises GP, LLC (“Armada GP”), and the members of Wighthall Hotels & Resorts, LLC, a Delaware limited liability company; Wight International Construction, LLC, a Delaware limited liability company; Elite Media Holdings, LLC, a Wyoming limited liability company; Diamond Star Aerospace, LLC, a Delaware limited liability company; and Armada Marine Holdings, LLC, a Delaware limited liability company (the “Sector Subsidiaries”). Pursuant to the Contribution Agreement, all the members of each of the Sector Subsidiaries shall contribute 100% of the outstanding equity interests in the Sector Subsidiaries to the Registrant so that each Operating Entity becomes a wholly-owned subsidiary of the Registrant. In exchange for said equity interests, the Registrant will issue a total of Two Hundred Ten Million (210,000,000) limited partner interests (“LP Units”) to the preferred members of the Sector Subsidiaries to be issued pari passu, and certain incentive distribution rights (“IDRs”) to the common member, which is Armada GP for each operating entity. |
Of the 210,000,000 LP Units to be issued, 42,000,000 will be Common LP Units and the remaining 168,000,000 will be Subordinated LP Units. The properties for the Common LP Units, Subordinated LP Units and the Incentive Distribution Rights are defined in the Registrant’s limited partnership agreement (the “LPA”), executed on October 17, 2017 – see the Registrant’s 8-K filing for that period for a copy of the LPA, which is an exhibit thereto. Common LP Units have a first call on cash distributions to the extent of the LP Units’ minimum quarterly distribution (“MQD”), which is set at $0.125 per quarter, or $0.50 per annum, in the LPA. If there is any shortfall in the payment of the MQD from prior quarters, all arrearages on the MQD must be paid to the common LP Units before any distributions can be made to the subordinated LP Units. The LPA also subordinates LP Units held by the general partner and its affiliates as an internal risk mitigation control so that Common LP Units held by the public are prioritized to receive their MQD.
Incentive Distribution Rights are the right to an increasing share of cash distributions as certain cash distribution benchmarks above and beyond the MQD are achieved for the limited partners, which is all set forth the LPA. Management’s intent was to structure the Contribution Agreement to incentivize the management to both prioritize meeting the MQD for the public’s Common LP Units and to maximize the total value of distributions to the limited partners, or LP Unit holders.
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The LPA fixed the per annum minimum distribution for the LP Units at $0.50 based on providing a 5% rate of return on each LP Unit. Accordingly, 210,000,000 was determined to be the number of LP Units to be issued in exchange for the Sector Subsidiaries based on the pro-forma cash flow projections and the ability to cover the $0.50 minimum annual distribution, with subordination of 80% of the LP Units acting as an internal risk mitigation control.
The Sector Subsidiaries maintain separate operations in the sectors of Hotels & Resorts, Construction, Aviation, Maritime and Media & Entertainment, and have been consolidated under the Registrant in order to transact with each other and third parties so as to maximize distributions to the LP Unit holders.
The Registrant has considered the guidance pursuant to Rule 11-01(d) of Regulation S-X and related interpretations and has concluded the contributions of the entities are contributions of assets and not of businesses. Accordingly, we will not be filing historical financial statements. We have included the required pro forma financial information as a result of the completion of the Contribution.
The respective operations of the Sector Subsidiaries are as follows:
| - | Wight International Construction (“WIC”) is the core of the portfolio, providing construction expertise to the Maritime and Hotels & Resorts divisions to enhance value and create additional revenue and profit opportunities. WIC will earn revenue through execution of engineering, procurement and construction contracts normally at a fixed percentage of the construction budget over the life of the project. It may also provide the financing for such projects, at a generous rate of return. Investments in this division tend to be controlled investments. | |
| - | Armada Marine Holdings (“AMH”) will focus on port development and operation, as well as other maritime opportunities, such as wreck recovery, shipyards, and cruise line operations. AMH earns its revenues through operation of assets and the creation and financing of additional assets (eg. by adding additional cruise ships or new port facilities). Investments in this division tend to be control investments. A significant portion of its activities will be based out of Puerto Rico, including a mega-yacht marina, yacht club and hotel development and a shipyard in Port Caribe, Puerto Rico. To aid Puerto Rico in its recovery efforts from the impact of Hurricane Maria, AMH is pivoting its operations there in the near term away from travel tourism towards shipping, port development and infrastructure, but just for the short term as management believes travel and tourism will be an integral part of rebuilding the economy of Puerto Rico. | |
| - | Wighthall Hotels & Resorts, LLC (“WHR”) will develop hotels and resorts throughout the world, though with a focus on the U.S. and the Caribbean regions. It will earn a 10% development fee during the development phase, plus revenues from the sale of residential units in subsequent years of the development phase. After development is complete, stabilized, recurring revenue will be generated by management fees, and food, beverage and spa sales. WHR will usually work in partnership with Wight International Construction, who will oversee construction. Investments in this division tend to be control investments. | |
| - | Diamond Star Aerospace, LLC (“DSA”) will co-ordinate the management charter operators with FAA part 135, 125 and 121 charter certificates. This business will be complimented by DSA’s development of a private aircraft financing and leasing company whose aircraft will enter into a charter management program with DSA’s charter operators. Revenues from the aircraft charters will be allocated 2/3 to the aircraft and owner and 1/3 to the charter operators, which are also responsible for expenses but generally, pass those on to the charter customers. DSA plans to spin out the aircraft financing and leasing company in the first quarter of 2018 creating a windfall for distributions to the LP Unit holders. In addition, DSA is working on proposals to requests for proposals (RFPs) on certain aerospace projects in the United States. | |
| - | Elite Media Holdings, LLC (“EMH”) is linked to the rest of the portfolio through its ability to create valuable entertainment properties based upon its other operations, referred to as “branded narratives”. It has created a media fund that will finance and produce a slate of television shows and feature films over the next 5 years, generating media production tax credits that may be allocated as distributable cash flow for the LP Unit holders. |
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Information Regarding Forward Looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “intend,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “predict,” “potential,” or similar expressions in this document or in documents incorporated by reference in this document. Examples of these forward-looking statements include, but are not limited to:
| ● | our business and growth strategies; |
| ● | our future results of operations; |
| ● | anticipated trends in our business; |
| ● | the capacity and utilization of our resources; |
| ● | our ability to successfully and economically explore for and develop geothermal resources; |
| ● | our business development prospects, projects and programs, including timing and cost of construction of new projects and expansion of existing projects; |
| ● | the fulfillment of the respective parties’ rights and obligations under our joint ventures, leases, permits and all other agreements; |
| ● | our liquidity and ability to finance our business development activities; |
| ● | our working capital requirements and availability; |
| ● | our illustrative growth goals and business development and acquisition projections; |
| ● | market conditions in the different industries in which we operate; and |
| ● | the impact of environmental and other governmental regulation. |
These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements:
| ● | the failure to obtain sufficient capital resources to fund our operations; |
| ● | unsuccessful construction and expansion activities, including delays or cancellations; |
| ● | incorrect estimates of required capital expenditures; |
| ● | increases in the cost of operations; |
| ● | impact of environmental and other governmental regulation, including delays in obtaining permits or other permissions; |
| ● | hazardous and risky operations relating to the development of any projects; |
| ● | our ability to successfully identify and integrate acquisitions; |
| ● | our dependence on key personnel; |
| ● | changes in applicable laws, rules or regulations; |
| ● | the potential for claims arising from any operations; |
| ● | general competitive conditions within the different industries in which we operate; and |
| ● | financial market conditions. |
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All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
The U.S. dollar is the Company’s functional currency. All references to “dollars” or “$” are to United States dollars.
The following discussion and analysis is intended to help you understand our results of operations for the nine months ending September 30, 2017 and 2016, and our financial condition as at September 30, 2017 and December 31, 2016. You should read the following discussion and analysis together with our audited financial statements and the notes to the financial statements included under Item 1 in this report. Our future financial condition and results of operations will vary from our historical financial condition and results of operations described below based on a variety of factors. You should carefully review the risks described under Item 1A and elsewhere in this report, which identify certain important factors that could cause our future financial condition and results of operations to vary.
Liquidity, Capital Resources and Financial Condition
Financial Condition as at September 30, 2017 (“2017 Period”) versus December 31, 2016 (“2016 Period”)
As of September 30, 2017 we had no assets (2016 Period: nil), liabilities totaling $719,740 (2016 Period: $376,760) and an accumulated deficit of $2,466,363 (2016 Period: $432,488). This increase in liabilities was the result of expenses incurred through our efforts to develop the business and related to our registration as a reporting issuer with the SEC, as outlined below, as well as a one-time cost of $1,690,895 for extending the life of our warrants. We will, in all likelihood, sustain continued operating expenses without corresponding revenues until we can execute on one or more of our business development and acquisition opportunities, and we will continue to depend upon shareholders and officers to make loans to the Company to meet any costs that may occur. All such advances will be interest-free.
Results of Operations for the three months ending September 30, 2017 (“2017 Period”) and 2016 (“2016 Period”)
The Company has not yet realized any revenues or earnings from operations. Our expenses in the 2017 Period were for general and administrative costs of $253,489 (2016 Period: $21,838), finance costs of $3,000 (2016 Period: nil), amortization of debt discount of $25,205 (2016 Period: nil), a gain on change in fair value of derivative liability of $178 (2016: nil), related to the outstanding convertible loan note, and a one-time cost for extending the life of the Company’s warrants of $1,690,895 (2016 Period: nil). We will, in all likelihood, sustain continued operating expenses without corresponding revenues until we can execute on one or more of our business development and acquisition opportunities.
Results of Operations for the nine months ending September 30, 2017 (“2017 Period”) and 2016 (“2016 Period”)
Expenses in the 2017 Period were for general and administrative costs of $261,203 (2016 Period: $38,427), finance costs of $9,029 (2016 Period: nil), amortization of debt discount of $74,753 (2016 Period: nil), a gain on change in fair value of derivative liability of $2,005 (2016: nil), related to the outstanding convertible loan note, and a one-time cost for extending the life of the Company’s warrants of $1,690,895 (2016 Period: nil).
The accompanying 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 does not have cash or other material assets nor does it have any operations or revenues from operations. It is relying on interest free advances from its officers and directors to meet its limited operating expenses.
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Conversion of BIM Homes, Inc. to Armada Enterprises, LP
On October 11, 2017, we received the final affirmations to complete a 100% vote of shareholders to execute the Plan of Conversion to convert BIM Homes, Inc. from a Delaware corporation to a Delaware limited partnership called “Armada Enterprises, LP.” The Certificate of Conversion and Certificate of Limited Partnership for Armada Enterprises, LP were filed with the Delaware Secretary of State Division of Corporations effective October 16, 2017. Upon effectiveness of these filings, the Registrant’s governance structure changed such that it will be managed by a general partner, and pursuant to the Plan of Conversion, the controlling shareholder is now the General Partner. As part of this conversion, all common stock in BIM Homes, Inc. will be converted into Limited Partnership Units (“LP Units”) and all preferred stock in BIM Homes, Inc. will be canceled upon final approval of the conversion from FINRA.
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.
Disclosure of Contractual Obligations
The Company has no contractual obligations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that the Company bears no direct market risk. The Company holds no debt or equity securities, no foreign currencies, and has no credit facility. The two officers and directors of the Company have agreed to extend loans to the Company as needed to meet obligations, however these will be interest free. The Company has not made any sales, purchases, or commitments with foreign entities which would expose it to currency risks.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of September 30, 2017, our disclosure controls and procedures were not effective for the same reasons that our internal controls over financial reporting were not adequate.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
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Under the supervision and with the participation of our Principal Executive Officer we conducted an evaluation of the effectiveness of our internal control over financial reporting, as of September 30, 2017, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below.
| - | Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting to be able to have appropriately designed and operating entity level controls including risk assessment; information and communication; monitoring; and financial reporting. |
| - | Inadequate Segregation of Duties: We have an inadequate number of personnel to properly segregate duties to implement control procedures. |
| - | Lack of Audit Committee and Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. |
Management is committed to improving its internal controls and will (1) continue to assess and address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.
Management has discussed the material weakness noted above with our independent registered public accounting firm. This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this quarterly report.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting during the latest quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
PART II
There is no litigation, pending or threatened, by or against the Company.
Not applicable.
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.
None.
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| 31.1* | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
| 31.2* | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
| 32.1* | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer |
| 101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the Nine Months Ending September 30, 2017 (Unaudited), formatted in XBRL (eXtensible Business Reporting Language); (i) Condensed Balance Sheets at September 30, 2017 (Unaudited) and December 31, 2016, (ii) Condensed Statement of Operations for the Three and Nine Months Ending September 30, 2017 (Unaudited) and 2016, (iii) Condensed Statement of Changes in Stockholders’ Equity for the Nine Months Ending September 30, 2017 (Unaudited), (iv) Condensed Statement of Cash Flow for the Nine Months Ending September 30, 2017 (Unaudited) and 2016, and (v) Notes to Unaudited Condensed Financial Statements. |
* Filed herewith.
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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.
| ARMADA ENTERPRISES, LP. | ||
| (Registrant) | ||
| Date: November 20, 2017 | By: | /s/ George Wight |
| George Wight | ||
| Managing Member, Armada Enterprises GP, LLC | ||
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