UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED October 31, 2011
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER: 333-172647
BlueFlash Communications, Inc.
------------------------------
(Exact name of registrant as specified in its charter)
Florida 27-4562647
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
D. Brad German
1108 St. Joseph Drive, St. Joseph MI, 49085
269-208-7245
-------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.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). Yes [X] 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 definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 10,200,000 shares of common
stock are issued and outstanding as of October 31, 2011.
TABLE OF CONTENTS
Page
No.
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at October 31, 2011 (unaudited) and January 31, 2011 4
Statements of Operations (unaudited) .............................. 5
Statement of Stockholders' Equity (Deficiency) (unaudited) ........ 6
Statements of Cash Flows (unaudited) .............................. 7
Notes to Financial Statements (unaudited) ......................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. ............................................ 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk. ....... 14
Item 4T. Controls and Procedures. .......................................... 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. ................................................ 17
Item 1A. Risk Factors. ..................................................... 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. ...... 17
Item 3. Defaults Upon Senior Securities. .................................. 17
Item 4. Submission of Matters to a Vote of Security Holders. .............. 17
Item 5. Other Information. ................................................ 17
Item 6. Exhibits. ......................................................... 17
2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking
statements. These statements, identified by words such as "plan", "anticipate",
"believe", "estimate", "should", "expect" and similar expressions include our
expectations and objectives regarding our future financial position, operating
results and business strategy. These statements are subject to known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward - looking
statements. These forward-looking statements were based on various factors and
were derived utilizing numerous assumptions and other factors that could cause
our actual results to differ materially from those in the forward-looking
statements. These factors include, but are not limited to, our ability to secure
suitable financing to continue with our existing business or change our business
and conclude a merger, acquisition or combination with a business prospect,
economic, political and market conditions and fluctuations, government and
industry regulation, interest rate risk, U.S. and global competition, and other
factors. Most of these factors are difficult to predict accurately and are
generally beyond our control. You should consider the areas of risk described in
connection with any forward-looking statements that may be made herein. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. Readers should carefully review
this report in its entirety, including but not limited to our financial
statements and the notes thereto and the risks described in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2011. We advise you to carefully
review the reports and documents we file from time to time with the Securities
and Exchange Commission (the "SEC"), particularly our quarterly reports on Form
10-Q and our current reports on Form 8-K. Except for our ongoing obligations to
disclose material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events.
OTHER PERTINENT INFORMATION
When used in this report, the terms, "we," the "Company," "our," and "us" refers
to BlueFlash Communications, Inc., a Florida corporation.
3
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
--------------------------------------------------------------------------------
OCTOBER 31, JANUARY 31,
2011 2011
UNAUDITED AUDITED
----------- ------------
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents ........................ $ 10,156 $ 8,000
Accounts receivable .............................. -- --
----------- -----------
Total current assets ........................... $ 10,156 $ 8,000
----------- -----------
----------- -----------
TOTAL ASSETS ..................................... $ 10,156 $ 8,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------
CURRENT LIABILITIES
Accounts payable & Accrued liabilities ........... $ 650 $ 3,600
----------- -----------
Total liabilities .............................. 650 3,600
=========== ===========
STOCKHOLDERS' EQUITY (DEFICIENCY)
Capital Stock (Note 4)
Authorized:
300,000,000 common shares, $0.0001 par value.
Issued and outstanding:
10,200,000 and 9,000,000 common shares at
October 31, 2011 and January 31, 2011,
respectively ................................. $ 1,020 $ 900
Additional paid-in capital ....................... 19,980 8,100
Stock subscription receivable .................... -- (1,000)
Deficit accumulated during the development stage . (11,494) (3,600)
----------- -----------
Total Stockholders' Equity (Deficiency) ........ 9,506 4,400
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....... $ 10,156 $ 8,000
=========== ===========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes should be read in conjunction with
the financial statements
4
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE PERIOD
FROM INCEPTION
THREE MONTHS NINE MONTHS JANUARY 11,
ENDED ENDED 2011 TO
OCTOBER 31, OCTOBER 31, OCTOBER 31,
2011 2011 2011
------------ ------------ --------------
REVENUES ....................... $ -- $ -- $ --
------------ ------------ -------------
EXPENSES
General & Administrative ..... $ 1,482 $ 4,683 $ 4,783
Professional Fees ............ 650 3,211 6,711
------------ ------------ -------------
2,132 7,894 11,494
Loss Before Income Taxes ....... $ (2,132) $ (7,894) $ (11,494)
------------ ------------ -------------
Provision for Income Taxes ..... -- -- --
------------ ------------ -------------
Net Loss ....................... $ (2,132) $ (7,894) $ (11,494)
============ ============ =============
PER SHARE DATA:
Basic and diluted loss
per common share ............ $ -- $ --
============ ============
Basic and diluted
weighted Average Common
shares outstanding .......... 10,200,000 9,703,297
============ ============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes should be read in conjunction with
the financial statements
5
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
-----------------------------------------------------------------------------------------------------------------
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL STOCK DURING THE
-------------------- PAID-IN SUBSCRIPTION DEVELOPMENT
SHARES AMOUNT CAPITAL RECEIVABLE STAGE TOTAL
---------- -------- ---------- ------------ ----------- ---------
Inception - January ................... -- $ -- $ -- $ -- $ -- $ --
Common shares issued to Founder for
cash at $0.001 per share (par value
$0.0001) on 1/27/2011 ............... 9,000,000 900 8,100 (1,000) -- 8,000
Net (loss) ............................ -- -- -- -- (3,600) (3,600)
---------- -------- ---------- ------------ ----------- ---------
Balance - January 31, 2011 ............ 9,000,000 900 8,100 (1,000) (3,600) 4,400
========== ======== ========== ============ =========== =========
Stock Subscription .................. -- -- -- 1,000 -- 1,000
Private Placement of 1,200,000
Common Shares ($0.0001 par value) on
June 24, 2011 @ $0.01 per share ..... 1,200,000 120 11,880 (500) -- 11,500
Stock Subscription .................. -- -- -- 500 -- 500
Net (loss) ............................ -- -- -- -- (7,894) (7,894)
---------- -------- ---------- ------------ ----------- ---------
Balance - October 31, 2011 ............ 10,200,000 1,020 19,980 -- (11,494) 9,506
========== ======== ========== ============ =========== =========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes should be read in conjunction with the financial statements
6
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
FOR THE PERIOD
FROM INCEPTION
NINE MONTHS JANUARY 11,
ENDED 2011 TO
OCTOBER 31, OCTOBER 31,
2011 2011
------------ --------------
OPERATING ACTIVITIES
Net Loss ..................................... $ (7,894) $ (11,494)
------------ -------------
Changes in Operating Assets and Liabilities:
Increase (decrease) in accounts payable and
accrued liabilities ....................... (2,950) 650
------------ -------------
Net cash used in operating activities ........ (10,844) (10,844)
------------ -------------
FINANCING ACTIVITIES
Common stock issued for cash ................. 13,000 21,000
------------ -------------
Net cash provided by financing activities .... 13,000 21,000
------------ -------------
INCREASE IN CASH AND CASH EQUIVALENTS .......... 2,156 10,156
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,000 --
------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..... $ 10,156 $ 10,156
============ =============
Supplemental Cash Flow Disclosures:
Cash paid for:
Interest expense ........................... $ -- $ --
============ =============
Income taxes ............................... $ -- $ --
============ =============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes should be read in conjunction with
the financial statements
7
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 2011
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
BlueFlash Communications, Inc. (the "Company") is a development stage company,
incorporated in the State of Florida on January 11, 2011. BlueFlash
communications, Inc. intends to create, deliver and track all aspects of
geo-location based mobile device coupon campaigns that could have a material
impact on the young mobile advertising space. The Company's management has
chosen January 31st for its fiscal year end.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
Basis of Presentation
---------------------
The accompanying financial statements have been prepared in accordance with
United States generally accepted accounting principles (US GAAP) for interim
financial information and in accordance with professional standards promulgated
by the Public Company Accounting Oversight Board (PCAOB). They reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the nine months
ended October 31, 2011, respectively along with the period January 11, 2011
(date of inception) to October 31, 2011.
Accounting Basis
----------------
The Company is currently a development stage enterprise reporting under the
provisions of Accounting Standards Codification ("ASC") 915, Development Stage
Entity. These financial statements are prepared on the accrual basis of
accounting in conformity with accounting principles generally accepted in the
United States of America.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents are reported in the balance sheet at cost, which
approximates fair value. For the purpose of the financial statements cash
equivalents include all highly liquid investments with maturity of three months
or less.
Fair Value of Financial Instruments
-----------------------------------
The fair value of cash and cash equivalents and accounts payable approximates
the carrying amount of these financial instruments due to their short maturity.
8
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 2011
Earnings (Loss) per Share
-------------------------
The Company adopted ASC 260, Earnings per Share. Basic earnings (loss) per share
are calculated by dividing the Company's net income available to common
shareholders by the weighted average number of common shares outstanding during
the year. The diluted earnings (loss) per share are calculated by dividing the
Company's net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding for the period. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted as of the first of the year for any potentially dilutive debt or
equity. There are no diluted shares outstanding.
Dividends
---------
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown
Income Taxes
------------
The Company adopted ASC 740, Income Taxes, at its inception. Under ASC 740,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets, including tax loss and credit carryforwards, and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Deferred income tax expense represents the change during the
period in the deferred tax assets and deferred tax liabilities. The components
of the deferred tax assets and liabilities are individually classified as
current and non-current based on their characteristics. 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. No deferred tax assets or liabilities were recognized as of October
31, 2011.
Advertising
-----------
The Company will expense advertising as incurred. The advertising since
inception has been zero.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.
9
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 2011
Revenue and Cost Recognition
----------------------------
The Company has no current source of revenue; therefore the Company has not yet
adopted any policy regarding the recognition of revenue or cost.
Related Parties
---------------
Related parties, which can be a corporation, individual, investor or another
entity are considered to be related if the party has the ability, directly or
indirectly, to control the other party or exercise significant influence over
the Company in making financial and operating decisions. Companies are also
considered to be related if they are subject to common control or common
significant influence. The Company has these relationships.
Property
--------
The Company does not own any real estate or other properties. The Company's
office is located at 1108 St. Joseph Drive, St. Joseph MI, 49085
Recently Issued Accounting Pronouncements
-----------------------------------------
In June 2009, the Financial Accounting Standards Board ("FASB") issued SFAS No.
168, "The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles - a replacement of FASB Statement No. 162,"
("SFAS 168"). SFAS 168 establishes the FASB Accounting Standards Codification
("Codification") as the source of authoritative generally accepted accounting
principles ("GAAP") for nongovernmental entities. The Codification does not
change GAAP. Instead, it takes the thousands of individual pronouncements that
currently comprise GAAP and reorganizes them into approximately ninety
accounting topics, and displays all topics using a consistent structure.
Contents in each topic are further organized first by subtopic, then section and
finally paragraph. The paragraph level is the only level that contains
substantive content. Citing particular content in the Codification involves
specifying the unique numeric path to the content through the topic, subtopic,
section and paragraph structure. FASB suggests that all citations begin with
"FASB ASC," where ASC stands for Accounting Standards Codification. Changes to
the ASC subsequent to June 30, 2009 are referred to as Accounting Standards
Updates ("ASU").
In conjunction with the issuance of SFAS 168, the FASB also issued its first
Accounting Standards Update No. 2009-1, "Topic 105 -Generally Accepted
Accounting Principles" ("ASU 2009-1") which includes SFAS 168 in its entirety as
a transition to the ASC.
ASU 2009-1 is effective for interim and annual periods ending after September
15, 2009 and will not have an impact on the Company's financial position or
results of operations but will change the referencing system for accounting
standards.
10
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 2011
In February 2010, the FASB issued ASU 2010-09 "Subsequent Events - Amendments to
Certain Recognition and Disclosure Requirements" ("ASU 2010-09"), which amends
FASB ASC Topic 855, Subsequent Events, so that SEC filers no longer are required
to disclose the date through which subsequent events have been evaluated in
originally issued and revised financial statements. ASU No. 2010-09 was
effective immediately and the Company adopted these new requirements in the
first quarter of 2010. The adoption did not have a material impact on the
disclosures of the Company's financial statements.
As of October 31, 2011, all citations to the various SFAS' have been eliminated
and will be replaced with FASB ASC as suggested by the FASB in future interim
and annual financial statements.
As of October 31, 2011, the Company does not expect any of the recently issued
accounting pronouncements to have a material impact on its financial condition
or results of operations.
The Company has adopted all recently issued accounting pronouncements. The
adoption of the accounting pronouncements, including those not yet effective, is
not anticipated to have a material effect on the financial position or results
of operations of the Company.
NOTE 3. INCOME TAXES
The Company provides for income taxes under ASC Topic 740 which requires the use
of an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect currently.
ASC Topic 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In the
Company's opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset.
The Company utilizes the asset and liability method for financial reporting of
income taxes. Deferred tax assets and liabilities are determined based on
temporary differences between financial reporting and the tax basis of assets
and liabilities, and are measured by applying enacted rates and laws to taxable
years in which such differences are expected to be recovered or settled. Any
changes in tax rates or laws are recognized in the period when such changes are
enacted.
As of October 31, 2011, the Company has $4,483 in gross deferred tax assets
resulting from net operating loss carry-forwards. A valuation allowance has been
recorded to fully offset these deferred tax assets because the Company's
management believes future realization of the related income tax benefits is
uncertain. Accordingly, the net provision for income taxes is zero for the
period January 11, 2011 (inception) to October 31, 2011. As of October 31, 2011,
the Company has federal net operating loss carry forwards of approximately
$11,494 available to offset future taxable income through 2030. The difference
between the tax provision at the statutory federal income tax rate on October
31, 2011 and the tax provision attributable to loss before income taxes is as
follows:
11
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 2011
For the period
January 11, 2011
(inception) through
October 31, 2011
-------------------
Statutory federal income taxes ........ 34.0%
State taxes, net of federal benefits .. 5.0%
Valuation allowance ................... -39.0%
-------------------
Income tax rate ....................... -
===================
The Company has not been required to file income tax returns since the date of
inception.
As of October 31, 2011, the Company had estimated net loss carry forwards of
approximately $11,494 which expires through its tax year ending 2030.
Utilization of these net operating loss carry forwards may be limited in
accordance with IRCD Section 382 in the event of certain shifts in ownership.
NOTE 4. STOCKHOLDERS' EQUITY
Preferred Stock
---------------
As of October 31, 2011, the Company did not have any preferred stock authorized,
issued nor outstanding.
Common Stock
------------
On January 11, 2011, the Company issued 9,000,000 of its $0.0001 par value
common stock for $8,000 cash and $1,000 in a stock subscription receivable to
the founder of the Company. The issuance of the shares was made to the sole
officer and director of the Company and an individual who is a sophisticated and
accredited investor, therefore, the issuance was exempt from registration of the
Securities Act of 1933 by reason of Section 4 (2) of that Act.
On June 24, 2011, the Company sold 1,200,000 shares of common stock, $0.0001 par
value for $12,000. These shares were registered with the SEC on Form S-1 which
was declared effective by the SEC on May 13, 2011.
As of October 31, 2011, there are 300,000,000 Common Shares at $0.0001 par
value, authorized with 10,200,000 issued and outstanding.
NOTE 5. RELATED PARTY TRANSACTIONS
As of October 31, 2011, the sole officer and sole director of the Company is
involved in other business activities and may, in the future, become involved in
other business opportunities that become available. He may face a conflict in
selecting between the Company and other business interests. The Company has not
formulated a policy for the resolution of such conflicts.
12
BLUEFLASH COMMUNICATIONS, INC.
(A Development Stage Enterprise)
UNAUDITED NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 2011
NOTE 6. GOING CONCERN
As of October 31, 2011, the accompanying financial statements have been
presented on the basis that it is a going concern in the development stage,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.
For the period January 11, 2011 (date of inception) through October 31, 2011 the
Company has had a net loss of $11,494 consisting of SEC audit and review fees,
California state taxes, legal and incorporation fees for the Company to initiate
its SEC reporting requirements.
As of October 31, 2011, the Company has not yet emerged from the development
stage. In view of these matters, recoverability of any asset amounts shown in
the accompanying audited financial statements is dependent upon the Company's
ability to begin operations and to achieve a level of profitability. Since
inception, the Company has financed its activities principally from the sale of
equity securities. The Company intends on financing its future development
activities and its working capital needs largely from loans and the sale of
public equity securities with some additional funding from other traditional
financing sources, including term notes, until such time that funds provided by
operations are sufficient to fund working capital requirements.
NOTE 7. CONCENTRATION OF RISKS
Cash Balances
-------------
The Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). All other deposit accounts at FDIC-insured
institutions were insured up to at least $250,000 per depositor until December
31, 2009. On January 1, 2010, FDIC deposit insurance for all deposit accounts,
except for certain retirement accounts, returned to $100,000 per depositor. The
Company had no deposits in excess of insured amounts as of October 31, 2011.
NOTE 8. SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred subsequent to
October 31, 2011 through the date the interim financial statements were
available to be issued, for potential recognition or disclosure in the
accompanying financial statements. Other than the disclosures above, the Company
did not identify any events or transactions that should be recognized or
disclosed in the accompanying financial statements.
13
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
Overview
BlueFlash Communications, Inc. is a development stage company and was
incorporated in Florida on January 11, 2011, BlueFlash intends to develop
software and systems to create, deliver and track all aspects of geo-location
based mobile device coupon campaigns that could have a material impact on the
young mobile advertising space.
Results of Operations
---------------------
The following discussion should be read in conjunction with the condensed
financial statements and segment data and in conjunction with the Company's S-1
and amended S-1/A's. Results or interim periods may not be indicative of results
for the full year.
During the first three quarters of the fiscal year 2011, the Company was focused
on preparing the documentation required to be filed with the Securities and
Exchange Commission (SEC) and with the Financial Industry Regulatory Authority
(FINRA). On March 7, 2011 the Company filed a Registration Form S-1 and also
filed S-1/A Amendment on April 13, 2011. The registration statement was declared
effective on May 13, 2011.
Results of Operations
The Company did not generate any revenue during the three months ended October
31, 2011.
Total expenses the three (3) months ending October 31, 2011 were $2,132
resulting in an operating loss for the period of $2,132. Basic net loss per
share amounting to $.0001 for the three (3) months ending October 31, 2011.
General and Administrative expenses fees for the three (3) months ending October
31, 2011 were $1,482. Professional fees were $650 for accounting and legal
services.
Total expenses for the nine (9) months ended October 31, 2011 were $7,894
resulting in an operating loss for the period of $7,894. Total expenses for the
three (3) months ended October 31, 2011 were $2,132 resulting in an operating
loss for the period of $2,132 as compared to total expenses of $2,955 for the
three months ended July 31, 2011. The decrease in expenses was due primarily to
decreased general and administration fees in the quarter ended October 31, 2011.
Liquidity and Capital Resources
-------------------------------
At October 31, 2011 we had working capital of $9,506 consisting of cash on hand
of $10,156,and $650 in current liabilities as compared to working capital of
$4,400 at January 31, 2011 and cash of $8,000.
Net cash used in operating activities for the nine months ended October 31, 2011
was $10,844 as compared to $0 for the period from inception on January 11, 2011
through January 31, 2011.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to a smaller reporting company.
14
ITEM 4T. CONTROLS AND PROCEDURES
Management's Report On Internal Control Over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
company;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company;
and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of October 31, 2011 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
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The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of October 31, 2011.
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
Management's Remediation Initiatives
------------------------------------
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by June 30, 2012. Additionally, we plan to test our updated controls
and remediate our deficiencies by September 30, 2012.
Changes in internal controls over financial reporting
-----------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Not applicable to a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive
officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and
accounting officer
32.1 Section 1350 Certification of principal executive officer and principal
financial and accounting officer
101* Interactive Data Files of Financial Statements and Notes.
* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101
to the Quarterly Report on Form 10-Q shall be deemed "furnished" and not
"filed".
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BlueFlash Communications, Inc.
BY: /s/ D. Brad German
------------------
D. Brad German
President, Secretary, Treasurer,
Principal Executive Officer,
Principal Financial and Accounting
Officer and Sole Director
Dated: November 23, 2011
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