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CREDEX CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

July 30, 2014

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information contained in this prospectus.


We are a development stage company. Although Credex has not operated pursuant to its business plan, in 2005 Credex purchased a portfolio of defaulted credit card debt to test the feasibility of its business plan. On a trial basis accounts from the portfolio were collected. The remainder of the portfolio was then sold. Our auditors have raised substantial doubt as to our ability to continue as a going concern. We need a minimum of approximately $100,000 during the next 12 months to begin implementation of our business plan.

The Company recently decided to pursue a new business opportunities and entered into a memorandum of understanding (the "MOU") with Kirida Resources Inc. ("Kirida"), as of June 2014 the MOU with Kirida has been cancelled due to lack of financing. Credex is still wanting to pursue and implement forestry management programs in emerging market countries.

The Company was introduced to Kirida through mutual contacts in the summer of 2013. During its discussions with Kirida, the Company learned about attractive global investment opportunities in timber, particularly in Liberia given the availability and accessibility to the forested land for logging and development, the ability to acquire land, the ability to obtain required licenses for logging and forestry activities, the high quality timber species and high demand in Europe and Asia for logs, sawn wood and other processed and specialty products. After learning more, the Company approached Kirida about potentially collaborating to make an investment in timber. Our agreement with Kirida is not exclusive for either party.

We currently have no agreements and do not anticipate entering into any such agreements until we find a suitable business.

We intend to use the proceeds to develop our business operations. See "Business" and "Use of Proceeds." We are a development stage company with no revenues or operating history. Our address is 848 Rainbow Blvd, # 2096 Las Vegas, Nevada 89107. The telephone number is 801-243-5661. While our address is in Nevada, our sole officer and director currently operate our business from Utah without an office and through the use of phone and email.

Since our inception, we have devoted our activities to the following:

(1) Purchasing a debt portfolio;

(2) Obtaining bids from professional collectors to collect the portfolio;

(3) Developing contacts from whom to purchase portfolios;

(4) Contracting for operational support; and

(5) Securing enough capital to carry out these activities.

3 Item 2A. S-1 Withdrawal

On 20 May 2014, the Company filed Form RW, registration Withdrawal Request SEC Accession No. 0001549983-14-000015, withdrawing the previous S-1. At this time the Company has no active, open, or pending offerings.

Plan of Operations

Development stage operating expenses during the period from inception on September 2, 2005 to June 30, 2014 were $349,476 which consisted primarily of general and administrative expenses related to legal, accounting and other fees related to our formation and public statement filings with cumulative revenue from inception to June 30, 2014 of $23,417 including finance income of $15,417 and consulting income of $8,000. Our net loss was $327,579 from inception to June 30, 2014.

Comparison of the Three Months Ended June 30, 2014 and 2013

Lack of Revenues

We have limited operational history. For the three months ended June 30, 2014 and 2013 we did not generate any revenues. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

Operating Expenses

The Company's operating expenses for the three months ended June 30, 2014 and 2013 were $1,100 and $1,250 respectively. Operating expenses consisted of professional fees of $ 800 and stock transfer agent fees of $300 for the three months ended June 30, 2014. Operating expenses for the three months ended June 30, 2013 consisted of professional fees of $950 and stock transfer agent fees of $300

Comparison of the Six Months Ended June 30, 2014 and 2013

Lack of Revenues

We have limited operational history. For the six months ended June 30, 2014 and 2013 we did not generate any revenues. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

Operating Expenses

The Company's operating expenses for the six months ended June 30, 2014 and 2013 were $5,848 and $4,850 respectively. Operating expenses consisted of professional fees of $ 5,098, stock transfer agent fees of $600 and general and administrative expenses of $150 for the six months ended June 30, 2014. For the six months ended June 30, 2013 operating expenses consisted of professional fees of $4,250 and stock transfer agent fees of $600

Liquidity and Capital Resources

Our capital resources have been acquired through the sale of shares of our common stock and loans from shareholders and third parties.


At June 30, 2014 and December 31, 2013, we had total assets of $0 and $0 respectively.

At June 30, 2014 and December 31, 2013, our total liabilities were $26,137 and $20,289, respectively consisting primarily of accounts payable and shareholder loans.

Cash Requirements

We intend to provide funding for our activities, if any, through a combination of the private placement of the company's equity securities and the public sales of equity securities.

We have no agreement, commitment or understanding to secure any funding from any source.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Credex has never been in bankruptcy or receivership.


Credex's executive office is located at 848 Rainbow Blvd, # 2096 Las Vegas, NV 89107. The telephone number is (801) 243-5661.

Credex is not operating its business plan until such time as capital is raised for operations. To date its operation has involved only selling stock to meet expenses.


The Company is currently looking to pursue business opportunities.

We are looking at forestry management programs in emerging market countries. The Company is currently reviewing various forestry management and harvesting projects.

The Company has attempted to attract private placement investments in the past. Thus far, the Company has not been able to implement its plans or begin operations because it has not been successful in raising the equity capital necessary to implement such plans.

There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid.

At the present time, we are classified as a "shell company" under Rule 405 of the Securities Act Rule 12b-2 of the Exchange Act. As such, all restricted securities presently held by the affiliates of our company may not be resold in reliance on Rule 144 until: (1) we file Form 10 information with the Securities and Exchange Commission ("SEC") when we cease to be a "shell company"; (2) we have filed all reports as required by Section 13 and 15(d) of the Securities Act for twelve consecutive months; and (3) one year has elapsed from the time we file the current Form 10 type information with the SEC reflecting our status as an entity that is not a shell company.


Memorandum of Understanding

The Company entered into an Amended and Restated Memorandum of Understanding with Kirida (the "MOU"), last amended and restated as of February 17, 2014. The MOU was cancelled in Jun 2014

The Papua New Guinea Timber Market

We do not currently have any business in Papua New Guinea and this information is only being provided to understand a market that we wish to enter.

The Independent State of Papua New Guinea ("PNG"), is a country in Oceania that occupies the eastern half of the island of New Guinea (the western portion of the island is a part of the Indonesian provinces of Papua and West Papua) and numerous offshore islands. It is located in the southwestern Pacific Ocean. The following information was collected from the Papua New Guinea Forest Authority (PNGFA) website

PNG's real Gross Domestic Product (GDP) was about K8,084.4 million in 2005. The contribution to this real GDP from the agriculture, forestry and fishing sector was estimated at K3,114.6 million or 38.5%. Using the relative values of exports generated by the forestry sector in 2005, this suggests that forestry's contribution to real GDP in 2005 was as high as K742.2 million or 9.2 percent of total real GDP.

The forest industry has mainly been log export oriented. About two million cubic meters of tropical logs are exported annually making PNG the world's second largest exporter of tropical logs after Malaysia. In 2005, the export of forest products represented 4.7 percent or K476.3 million of the value of all exports from PNG (K10,147.5 million) making forest products the largest non-mineral export from PNG in terms of value.

The forestry sector employs directly about 7,000 people with half working in logging operations and the other half employed in other activities such as veneer processing, timber processing, carpentry, supporting workshop/engineering services.

Downstream processing of forest products in PNG has for the last several years, been the fastest growing manufacturing sector of the economy. Log exports have declined by over 33 percent since the Asian currency crisis of 1997, and declined again in 2004 compared to 2003; this at a time when other exporting countries are increasing production and exports. On the other hand, exports of downstream processing products have increased by over 200 percent since 1997 (in US dollar value) and by almost 10 percent in 2004 compared to 2003.

The majority of the timber is exported. PNG logs are exported to 11 countries, all in the Asian region. More than 80 percent of log exports go to just China/Hong Kong, Korea and Japan. China is the principal market for round logs from PNG; it imported over one million cubic meters of logs from PNG in 2002 rising to 1.7 million cubic meters in 2005 accounting for 74.6 percent of PNG's log exports. The major markets for processed and semi-finished products are Australia, New Zealand and various South Pacific countries. Veneer is predominantly exported to China and South Korea.

There are 29 forest concessions currently in production, covering a total area of 3.5 million hectares. Privately owned companies control all commercial timber production from natural forest areas. Companies that are directly or indirectly owned or controlled by Malaysian multinational companies dominate commercial timber production. Five companies control over 80 percent of the market.


The forestry sector has a high cost structure associated with both the technical nature of operations and administration of industry associated with the administration regime under the current legislation.

The cost structure associated with the technical aspects of forest relate to the vast land areas that are required to be covered with diverse terrain, weather pattern, ecological systems, type and quality of timber resources, and the highly depreciable nature of plants and equipment used to harvest the forest resources. The technical issues provide significant business cost changes to the industry.

Coupled with the above technical challenges the administration of the industry requires constant consultation with the various levels of governments, non-government organizations and most importantly the customary landowners. The lengthy consultation coupled with diverse and often opposing views of how the forest resources should be developed and managed by the stakeholders further compound costs of doing business in the industry.

Log scaling is an important aspect of logging and all log scalers operating in the PNG forest industry must be licensed. The procedure for obtaining a licence is detailed below.

An application is lodged to the Managing Director, in PNG Forest Authority regulation form 206 Application for Log Scalers License. With the application a log scaler's certificate must be attached, two passport size photographs, a performance bond fee of K500 made to the National Forest Service in a bank check and a two-year license fee or registration fee of K200 also made out in a bank check to the National Forest Service.

Upon receipt of the application, it is registered and a license number is allocated. For the current log scalers a renewal fee of K200 is acceptable, if the employee has not left the company and has continually worked with the company. If the scaler has decided to leave the company, he automatically terminates his log scaler license and cannot use the same license in another company as the BOND IS NON-TRANSFERRABLE. He must apply for a new log scalers license with that company and must be approved by the Managing Director of the National Forest Service before he can scale logs. For new log scalers applications will make a payment of K700 (Bond K500 and K200 registration fee).

The Managing Director signs the application if the applicant meets all the requirements in obtaining a log scaler's licence. An identification card is issued and forwarded together with the signed copy of the approval letter by the Managing Director to the applicant with a copy to the company manager, and the Papua New Guinea Forest Service Project Supervisor on site. This license is valid for two years only and must be renewed. Notification of approval is by regulation form 205, Log Scalers Licence.

A log scalers license can be terminated if the log scaler does not comply with the log scaling practices as prescribed in the Directions for the Identification, Scaling and reporting on logs harvested from Natural Forest Logging Operations-April 1996 or is negligent in the performance of his duties. As a consequence the bond may be forfeited to PNGFA and the log scalers license terminated. However, before the scalers license can be terminated or cancelled, a notice in regulation form 207, Notice of Intention to cancel Log Scalers License is forwarded to the Scaler and he must respond within 14 days in writing to the Chief Scaler as to why his license should be terminated or cancelled. If the grounds for the cancellation of the Log Scalers License warrants cancellation then the license is immediately cancelled.

Project Supervisors are required to carry out monthly log scaling checks on every log scaler in the projects they monitor to see that all log scalers comply with the directions imposed by the PNGFA.

7 Cameroon Timber Market

We do not currently have any business in Cameroon and this information is only being provided to understand a market that we wish to enter.

The following information about the Cameroon timber market has been collected from a case study on Cameron by the International Tropical Timber Organization in 2009.

Cameroon has an estimated a total land area of 475,442 square kilometers. Cameroon's economy is based on agriculture and livestock (44% of GDP), industry (16%) and services (40%) (CIA, 2008). The contribution forestry (accounted within agriculture and livestock) to the GDP is estimated at 6.5%.

The total area covered by dense productive forests is estimated at 16,467,570 hectares. The tropical humid forests are mainly exploited for timber, firewood and non-timber forest products, while forests in the north are mainly used for firewood and non-wood products.

In general the forest resources are the property of the State; however, forest exploitation is conducted in the field by private individuals and industrial enterprises that received timber harvesting titles from the government. There are 9 types of legal timber harvesting titles in Cameroon that can be grouped as follows:

The exploitation permits, which include three types of titles: the timber exploitation permit, the special products exploitation permit and the firewood exploitation permit. The exploitation permits are granted for one year and are non-renewable, they allow exploitation or collection of well-defined quantities of forest products in a given area. These products may be special products, or volumes of raw timber not in excess of 500 square meters, or firewood and poles extracted for profit.

The authorizations which consist of two types of titles: the personal cutting authorization and the wood recovery authorization (rescue cutting and wood collection). A personal cutting authorization is issued for the benefit of an individual for non-profit personal use to collect quantities of wood that cannot exceed 30 cubed meters gross. Timber recovery authorizations may be issued as part of a development project likely to cause disruption or destruction in a forest. These permits are only issued after a prior environmental impact assessment has been conducted by the applicant in compliance with norms set by the environmental authority.

The community forests are granted for a maximum area of 5,000 hectares. Logging takes place on behalf of the community, governed, by sales of standing volumes, personal logging authorization, or by permit, in accordance with a simple management plan approved by the forest authority. Industrial exploitation using heavy machineries for skidding and log transportation is forbidden in community forests. Only artisanal and semi-industrial techniques for which felled trees are sawn on the felling spot are allowed.

The sales of standing volume are granted within the non-permanent forest estate and consist of licenses to log in an area not exceeding 2,500 hectares or a specified volume of standing timber for sale.

Municipal forests (or council forests) have a management plan approved by the forestry administration. The management plan is established at the behest of the heads of municipalities, and any activity must comply with it. Forest products of any kind from operations in council forests belong exclusively to the municipality.


Forest concessions are assigned after notice from an inter-ministerial committee, and following a public call for tender. Concessions from one company may not exceed a total area of 200,000 hectactres. After awards, the company signed a tentative agreement for a temporary contract of 3 years during which a plan for sustainable management must be prepared by the company and approved by the forestry administration. Concessions are granted for a period of 15 years and they are renewable.

While community forests and municipal forests are exclusively granted to local communities or local municipal council grouping persons of Cameroonian nationalities, industrial logging concessions are granted both to Cameroonian an foreign entities.

In total there are 105 companies involved in industrial timber harvesting and/or log processing in Cameroon, of these 90 companies have been granted logging rights the 15 others are only involved in timber processing and/or export. Many of these enterprises belong to a few business holdings of European or Asian interests. A typical example is the Wickwood group (China) which owns seven logging enterprises. Most of the industrial enterprises tend to be integrated to include not only timber harvesting but also log processing. The integration sometimes takes place at the level of a group, in that case many individual logging enterprises belonging to the same business group would supply logs to one or two timber processing mills.

Liberia Timber Market

We do not currently have any business in Liberia and this information is only being provided to understand a market that we wish to enter.

The following information about the Liberian timber market has been collected from and a case study on Liberia by the International Tropical Timber Organization in 2005.

Liberia is a low income country heavily reliant on foreign assistance for revenue. Civil war and government mismanagement destroyed much of Liberia's economy, especially the infrastructure in and around the capital, Monrovia. Many businesses fled the country, taking capital and expertise with them, but with the conclusion of fighting and the installation of a democratically-elected government in 2006, several have returned. Liberia has the distinction of having the highest ratio of direct foreign investment to GDP in the world. Richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, Liberia had been a producer and exporter of basic products, primarily raw timber and rubber and is reviving those sectors. Local manufacturing, mainly foreign owned, had been small in scope.

Its government has taken steps to reduce corruption, build support from international donors, and encourage private investment. Embargos on timber and diamond exports have been lifted, opening new sources of revenue for the government and Liberia shipped its first major timber exports to Europe in 2010. The country reached its Heavily Indebted Poor Countries initiative completion point in 2010 and nearly $5 billion of international debt was permanently eliminated. This new status will enable Liberia to establish a sovereign credit rating and issue bonds. Liberia'sParis Club creditors agreed to cancel Liberia's debt as well. The IMF has completed the sixth review of Liberia's extended credit facility, bringing total disbursements to over $379 million. The African Development Bank approved a grant of $48 million in 2011 to support economic governance and competitiveness. Rebuilding infrastructure and raising incomes will depend on generous financial and technical assistance from donor countries and foreign investment in key sectors, such as infrastructure and power generation. The country has achieved high growth during 2010-12 due to favorable world prices for its commodities.


Liberia is blessed with a rich forest resource, a substantial part of which, however, has been lost or degraded in recent years during civil war. Once the country emerges from its political problems, a newly reconstituted and restructured forest sector, built on the pillars of accountability and transparency, could play a major role in economic growth and sustainable development. But its success will depend very much on strong political will and international support.

Liberia's public forest estate ("PFE") covers an estimated 1.41 million hectares, comprising 1.31 million hectares of natural-forest production PFE and 101,000 hectares of protection PFE. More forest could be committed to the PFE from the presently uncommitted area of about 2 million hectares. None of the PFE is currently thought to be under Sustainable forest management ("SFM"). The existing protection PFE comprises less than 3% of the country's forests.

Ever since the United Nations Conference on Environment and Development (UNCED), which took place in Rio de Janeiro in 1992, countries have been trying to come to an international agreement on how to protect and sustainably manage the world's forests. Finally, in 2007, the 192 member states of the United Nations Forum on Forests (UNFF) - including Liberia - adopted the Non-legally Binding Instrument on All Types of Forests (NLBI), which is also commonly known as the "Forest Instrument". This significant international consensus was reached to boost the implementation of sustainable forest management and thus to maintain and enhance the economic, social and environmental values of all types of forests, for the benefit of present and future generations.

Through this agreement, the countries committed themselves (on a voluntary basis) to carry out a wide range of policies and measures promoting stakeholder participation in forest management and decision making, benefits for local communities, valuation of all goods and services from forests, good governance of the forest sector, forest financing, strengthening of forestry education and many other areas that are important to ensure the protection and sustainable management of forest resources and to combat deforestation and forest degradation. Liberia has agreed to become one of the first countries to implement the Forest Instrument. Much of the timber-processing capacity and other infrastructure was destroyed during the civil war and is yet to be rebuilt.

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Source: Edgar Glimpses

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