Management
’
s Discussion and Analysis of Financial Condition and Results of Operations
Disclaimer Regarding Forward Looking Statements
Our Management
’
s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview of the Company
’
s Formation and Recent Events
We were incorporated under the laws of the State of Nevada on December 29, 2008, under the name Horizontal Marketing Corp which was changed to BnetEFactor Inc. in September 2012 and then changed to Bnet Media Group, Inc. in March 2013 for the purpose of providing marketing services to companies and individuals. We have realized only marginal revenues from operations. Our efforts, to date, have focused primarily on the development and implementation of our business plan. Currently, we lack the resources required to effectively develop a digital publishing business and, therefore, have been engaged in a search for a strategic business partner or a merger or acquisition partner with the resources to establish a business and provide greater value to its stockholders.
According to our prior management
’
s disclosure in our prior periodic filings, as well as our disclosure in this quarterly report (including the cover page of this quarterly report) we have not had any material business or operations and under SEC Rule 12b-2 under the Securities Exchange Act of 1934, therefore we have historically been a
“
shell company
”
and will be until we either develop business operations organically or acquire an operating business. We are considered a
“
shell company
”
because we have no or nominal assets and nor or nominal operations and no employees. Historically, we have been actively seeking to acquire assets or shares of an entity actively engaged in business that generates revenues, in exchange for our securities. Our purpose was to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms who or which desire to seek the perceived advantages our company may offer. Although we have entered into two agreements. (1) To acquire the assets of bNET Communications, Inc. (see below), that transaction has not closed. (2) We completed an Asset Purchase Agreement of certain precious stones known as the
“
Ruby Art Carvings
”
. (see below). Until the bNET Communications transaction closes or we find another company to acquire or develop new operations organically, we will be a
“
shell
”
company.
I.
Agreement to Acquire the Assets of bNET Communications, Inc
.
On November 30, 2012, we entered into an Asset Purchase Agreement (the
“
Bnet Asset Purchase Agreement
”
) with bNET Communications, Inc., a Nevada corporation (
“
BNET
”
), pursuant to which we have agreed to purchase BNET
’
s digital media library in exchange for shares of our common stock. BNET operates bnetTV.com, and bnetTV.com, Inc., a content aggregator, internet broadcasting, publishing company and accredited media organization, that creates and distributes video content pertaining to new technology, primarily at corporate and consumer events, trade shows and conferences. bnetTV.com, Inc., has been streaming live broadcasts of corporate annual meetings over the internet for many large and small firms and broadcasting awards shows for various industries.
Due to the length of time required by BNET to satisfy the conditions precedent to Closing the Bnet Asset Purchase Agreement, on April 9, 2014, the parties entered into an Amendment to update specific provisions based on certain events that have transpired since the parties first entered into the agreement. Specifically, the total number of shares of our Common Stock to be issued to BNET was changed to 54,000,000 shares to give effect to our change in capitalization as a result of the 16-for-1 forward stock split of our issued and outstanding common stock effective in June 2013. While some of the conditions to Closing have been satisfied, the closing is still subject to a number of conditions precedent, among which require that BNET provide us with (1) audited financial statements for the fiscal years ended December 31, 2017, 2016, 2015, 2014, 2013, 2012 and 2011, along with a the audit report, with respect to the fiscal years ended December 31, 2017, 2016, 2015, 2014, 2013, 2012 and 2011, issued by a PCAOB registered firm; (2) a report of the value of the bNET Communications Assets established by the independent fair market valuation or the record value at the lower cost of cost or market; and (3) all approvals and clearance from all regulatory authorities with respect to the proposed acquisition.
BNET is principally controlled by Gerald E. Sklar, our Chairman, CEO and Anthony Sklar, one of our former officers and directors. As result of Gerald Sklar
’
s control position, if our proposed acquisition of the bNET Communications assets closes it will not be deemed to be an arms-length transaction.
II.
Acquisition of Certain Assets in Exchange for Series B Convertible Preferred Stock
Effective April 8, 2014, we completed an Asset Purchase Agreement (the
“
Agreement
”
) with Soren Soholt Christensen, a Danish citizen (
“
Christensen
”
), pursuant to which we purchased certain precious stones known as the
“
Ruby Art Carvings
”
(hereinafter the
“
Assets
”
) owned by Christensen in exchange for shares of our Series B Convertible Preferred Stock. The total number of shares of Series B Convertible Preferred Stock issued to Christensen as consideration for the Assets was 8,021,796 shares (the
“
Purchase Price
”
). The Series B Convertible Preferred Stock, in the aggregate, carries a 2% annual dividend and each share is convertible into shares of our Common Stock, par value $0.001 (the
“
Common Stock
”
) at a conversion price of $40.00 per share of Common Stock, subject to the rights, preferences and privileges of the Series B Convertible Preferred. The Series B Preferred Stock, in the aggregate, is also entitled to receive a two percent (2%) annual interest, beginning from the date of issuance. The Interest will accumulate from the date of issuance and may not be paid until twelve months (12) from the date on which the our Common Stock begins trading on a recognized securities exchange, or until such time as the Series B Preferred Stock is either converted or redeemed. Interest may be paid, on the value of the Purchase Price (the Series B Convertible Shares multiplied by the conversion price) at our option, in cash or restricted shares of our Common Stock. Interest paid by the issuance of our Common Stock, and the value of our Common Stock will be determined based on the
“
20-day volume-weighted average
”
of the bid price as quoted on a recognized securities trading platform.
Results of Operations
This discussion and analysis should be read in conjunction with our financial statements included as part of this Quarterly Report on Form 10-Q, as well as our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Results of Operations for Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017
Summary of Results of Operations
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
Revenue
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
15
|
|
|
88
|
|
|
Professional fees
|
|
5,080
|
|
|
16,189
|
|
|
Total operating expenses
|
|
5,095
|
|
|
16,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
(5,095)
|
|
|
(16,277)
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(5,095)
|
|
$
|
(16,277)
|
|
|
Operating Loss; Net Income (Loss)
Our net loss decreased from ($16,277) to ($5,095), from the three months ended June 30, 2017 compared to June 30, 2018. Our operating loss increased by the same amount from ($16,277) to ($5,095) for the same periods primarily due to annual filing fees by Bnet now trading on OTC markets.
Revenue
We have only had minimal revenues since our inception and have not recorded revenues during the periods presented.
General and Administrative Expenses
General and administrative expenses decreased by $73, from $88 for the three months ended June 30, 2017 to $15 for the three months ended June 30, 2018, primarily due to an Increase in internet and computer expenses.
Professional fees
Professional fees decreased by $11,109, from $16,189 for the three months ended June 30, 2017 to $5,080 for the three months ended June 30, 2018. For both periods these amounts are largely due to the amounts we pay our attorneys, auditors and listing fees to OTCMARKETS QB as a result of filing
periodic reports with the Securities and Exchange Commission. We expect these fees will increase if we continue to grow, as planned.
Results of Operations for Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017
Summary of Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
Revenue
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
2,544
|
|
|
110
|
|
Professional fees
|
|
28,973
|
|
|
27,468
|
|
Total operating expenses
|
|
31,517
|
|
|
27,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
(31,517)
|
|
|
(27,578)
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(31,517)
|
|
$
|
(27,578)
|
|
Operating Loss; Net Income (Loss)
Our net loss increased by $3,939 from ($27,578) to ($31,517), from the six months ended June 30, 2016 compared to June 30, 2017. Our operating loss increased by the same amount from ($27,577) to ($31,518) for the same periods. We believe these operating and net loss figures are lower than what we expect even in the periods before we are successful in either acquiring an operating business or organically growing a business.
Revenue
We have only had minimal revenues since our inception and have not recorded revenues during the periods presented.
General and Administrative Expenses
General and administrative expenses increased by $2,434, from $110 for the six months ended June 30, 2017 to $2,544 for the six months ended June 30, 2018, primarily due to a decrease in internet and computer expenses.
Professional fees
Professional fees increased by $1,505, from $27,468 for the six months ended June 30, 2017 to $28,973 for the six months ended June 30, 2018. For both periods these amounts are largely due to the amounts we pay our attorneys and auditors as a result of filing periodic reports with the Securities and Exchange Commission. We expect these fees will increase if we are successful in acquiring or organically growing operations.
Liquidity and Capital Resources for Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017
11
During the six months ended June 30, 2018 and 2017, because of our operating losses, we did not generate positive operating cash flows. Our cash on hand as of June 30, 2018 was $25 and our monthly cash flow burn rate is approximately $5,000. As a result, we have significant short term cash needs. These needs are being satisfied through proceeds from the sales of our securities and loans from both related parties and third parties. We will not be able to satisfy our cash needs from our revenues until at least the time we have acquired or organically grown an operating business, and even then there is no guarantee our revenues will be sufficient to satisfy our cash needs. In the alternative the company might be forced to sell the ruby collection which could result in sufficient cash to carry on operations or the increase of significant operations to take the company from shell status, and facilitate additional filings.
Our cash, current assets, total assets, current liabilities, and total liabilities as of June 30, 2018 and as of December 31, 2017, respectively, are as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
December 31, 2017
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
25
|
|
$
|
29
|
|
$
|
(4)
|
Total Current Assets
|
|
25
|
|
|
29
|
|
|
(4)
|
Total Assets
|
|
25
|
|
|
29
|
|
|
(4)
|
Total Current Liabilities
|
|
278,688
|
|
|
247,175
|
|
|
31,513
|
Total Liabilities
|
$
|
278,688
|
|
$
|
247,175
|
|
$
|
31,513
|
Our current assets decreased slightly as of June 30, 2018 as compared to December 31, 2017, due to us having $4 less cash on hand as of June 30, 2018. The decrease in our total assets between the two periods was also related to the having $4 less cash on hand as of June 30, 2018.
Our current liabilities increased by $31,513, as of June 30, 2018 as compared to December 31, 2017. This increase was entirely due to an increase in our annual filing fees by Bnet now trading on OTC markets.
In order to repay our obligations in full or in part when due, we will be required to raise capital from other sources. There is no assurance, however, that we will be successful in these efforts.
Sources and Uses of Cash
Operations
We had net cash used by operating activities of $4 for the six months ended June 30, 2018, as compared to net cash provided in operating activities of $41 for the six months ended June 30, 2017. For the period in 2018, the net cash used by operating activities consisted primarily of our net loss of ($31,517), a change in accounts payable of $255 and a change in accounts payable
–
related party of $31,233. For the period in 2017, the net cash provided in operating activities consisted primarily of our net loss of ($27,578), a change in accounts payable of $1,216, and a change in accounts payable-related party of $26,403.
Additionally,
an Officer of the Company advanced the Company $25 during the six months ended June 30, 2018.
Investments
We had no cash provided (used) by investing activities in the six months ended June 30, 2018 or June 30, 2017.
Financing
We had net cash provided by financing activities of $25 for the six months ended June 30, 2018, and $0 for six months ended June 30, 2017.
Off Balance Sheet Arrangements
We have no off balance sheet arrangements.
ITEM 3