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 December 31, 2010
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 333-160069
ADVANCED MESSAGING SOLUTIONS INC.
(Exact name of registrant as specified in its charter)
Nevada 98-0561888
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2377 Gold Meadow Way, Suite 100, Gold River, CA 95670
(Address of principal executive offices) (Zip Code)
916-526-2662
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate 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 [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small 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 a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [X] YES [ ] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
2,220,000 common shares issued and outstanding as of February 14, 2011
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
These financial statements have been prepared by Advanced Messaging Solutions
Inc. ("we," "us," "our," or the "Company") without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC"). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted in accordance with such SEC rules and regulations. In the opinion of
management, the accompanying statements contain all adjustments necessary to
present fairly the financial position of our Company as of December 31, 2010,
and our results of operations, and our cash flows for the nine month period
ended December 31, 2010. The results for these interim periods are not
necessarily indicative of the results for the entire year March 31, 2011. The
accompanying financial statements should be read in conjunction with our audited
financial statements for the fiscal year ended March 31, 2010 and the notes
thereto filed as a part of our Annual Report on Form 10-K filed with the SEC on
June 29, 2010.
2
ADVANCED MESSAGING SOLUTIONS INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, March 31,
2010 2010
-------- --------
(Unaudited)
ASSETS
Current assets
Cash $ 2,900 $ 20,131
Prepaid expenses 2,866 240
-------- --------
Total assets $ 5,766 $ 20,371
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 6,400 $ 11,600
Due to stockholder 100 100
-------- --------
Total liabilities 6,500 11,700
-------- --------
Stockholders' equity (deficit)
Preferred stock: $0.001 par value; 20,000,000 shares
authorized; no shares issued or outstanding -- --
Common stock: $0.001 par value; 100,000,000 shares
authorized; 2,220,000 shares issued and outstanding 2,220 2,220
Additional paid-in capital 48,780 48,780
Deficit accumulated during the development stage (51,734) (42,329)
-------- --------
Total stockholders' equity (deficit) (734) 8,671
-------- --------
Total liabilities and stockholders' equity (deficit) $ 5,766 $ 20,371
======== ========
See accompanying notes to the financial statements.
3
ADVANCED MESSAGING SOLUTIONS INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
From
December 27, 2007
Three Months Three Months Nine Months Nine Months (Inception)
Ended Ended Ended Ended through
December 31, December 31, December 31, December 31, December 31,
2010 2009 2010 2009 2010
---------- ---------- ---------- ---------- ----------
REVENUE $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Professional fees 1,500 249 3,750 20,361 37,882
General and administrative 2,010 2,392 5,655 4,882 13,852
---------- ---------- ---------- ---------- ----------
Loss before income taxes (3,510) (2,641) (9,405) (25,243) (51,734)
Provision for income taxes -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net loss $ (3,510) $ (2,641) $ (9,405) $ (25,243) $ (51,734)
========== ========== ========== ========== ==========
Net loss per common share -
basic and diluted $ (0.00) $ (0.00) $ (0.00) $ (0.01)
========== ========== ========== ==========
Weighted average number of common
shares outstanding -
Basic and diluted 2,220,000 2,220,000 2,220,000 2,220,000
========== ========== ========== ==========
See accompanying notes to the financial statements.
4
ADVANCED MESSAGING SOLUTIONS INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period from December 27, 2007 (Inception) through December 31, 2010
(Unaudited)
Deficit
Accumulated Total
Common Stock Additional During the Stockholders'
--------------------- Paid in Development Equity
Shares Amount Capital Stage (Deficit)
------ ------ ------- ----- ---------
Inception, December 27, 2007 1,500,000 $ 1,500 $ 13,500 $ -- $ 15,000
Net income -- --
---------- ---------- ---------- ---------- ----------
Balance, March 31, 2008 1,500,000 1,500 13,500 -- --
Shares issued at $0.05 per
share from September 16, 2008
to December 29, 2008 720,000 720 35,280 -- 36,000
Net loss (9,607) (9,607)
---------- ---------- ---------- ---------- ----------
Balance, March 31, 2009 2,220,000 2,220 48,780 (9,607) 41,393
Net loss (32,722) (32,722)
---------- ---------- ---------- ---------- ----------
Balance, March 31, 2010 2,220,000 2,220 48,780 (42,329) 8,671
Net loss (9,405) (9,405)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 2010 2,220,000 $ 2,220 $ 48,780 $ (51,734) $ (734)
========== ========== ========== ========== ==========
See accompanying notes to the financial statements.
5
ADVANCED MESSAGING SOLUTIONS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
From
December 27, 2007
Nine Months Nine Months (Inception)
Ended Ended through
December 31, December 31, December 31,
2010 2009 2010
-------- -------- --------
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss $ (9,405) $(25,243) $(51,734)
Adjustments to reconcile net loss to net cash used in
operating activities:
Changes in operating assets and liabilities
Prepaid expenses (2,626) 800 (2,866)
Accounts payable (5,200) 750 6,400
-------- -------- --------
Net cash used in operating activities (17,231) (23,693) (48,200)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in due to stockholder -- -- 100
Proceeds from issuance of common stock -- -- 51,000
-------- -------- --------
Net cash provided by financing activities -- -- 51,100
-------- -------- --------
Net change in cash (17,231) (23,693) 2,900
Cash, beginning of the period 20,131 44,654 --
-------- -------- --------
Cash, end of the period $ 2,900 $ 20,961 $ 2,900
======== ======== ========
See accompanying notes to the financial statements.
6
ADVANCED MESSAGING SOLUTIONS INC.
(A Development Stage Company)
December 31, 2010 and 2009
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS
Advanced Messaging Solutions Inc. (a development stage company) ("Advanced
Messaging Solutions" or the "Company") was incorporated under the laws of the
State of Nevada on December 27, 2007. Initial operations have included
organization and incorporation, target market identification, marketing plans,
and capital formation. A substantial portion of the Company's activities has
involved developing a business plan and establishing contacts and visibility in
the marketplace. The Company is engaged in the development and marketing of
secure text messaging service for desktop computer users. The Company has
generated no revenues since inception.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") for interim financial information, and
with the rules and regulations of the United States Securities and Exchange
Commission ("SEC") of Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP
for complete financial statements. The unaudited interim financial statements
furnished reflect all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. Unaudited interim results are not
necessarily indicative of the results for the full fiscal year. These financial
statements should be read in conjunction with the audited financial statements
of the Company for the fiscal year ended March 31, 2010 and notes thereto
contained in the information as part of the Company's Annual Report on Form 10-K
filed with the SEC on June 29, 2010.
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 810-10-20 of
the FASB Accounting Standards Codification. The Company is still devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since inception
have been considered as part of the Company's exploration stage activities.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
Actual results may differ from the estimates.
Due to the limited level of operations, the Company has not had to make material
assumptions or estimates other than the assumption that the Company is a going
concern. FISCAL YEAR END
The Company elected March 31 as its fiscal year ending date.
7
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph
820-10-35-37") to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, Paragraph
820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three (3) broad levels. The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in
active markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The three (3) levels of fair value hierarchy defined by
Paragraph 820-10-35-37 are described below:
Level 1 Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
The carrying amounts of the Company's financial assets and liabilities, such as
cash, prepaid expenses, and accounts payable, approximate their fair values
because of the short maturity of these instruments.
The Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
December 31, 2010 or March 31, 2010; no gains or losses are reported in the
statement of operations that are attributable to the change in unrealized gains
or losses relating to those assets and liabilities still held at the reporting
date for the interim period ended December 31, 2010 or 2009.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company will recognize revenue when it
is realized or realizable and earned. The Company considers revenue realized or
realizable and earned when it has persuasive evidence of an arrangement that the
services have been rendered to the customer, the sales price is fixed or
determinable, and collectability is reasonably assured.
INCOME TAXES
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets 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 the statements
of operations in the period that includes the enactment date.
8
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures. The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
Section 740-10-25.
NET LOSS PER COMMON SHARE
Net loss per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification. Basic net loss per common share is computed
by dividing net loss by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per common share is computed by
dividing net loss by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during the period. There were no
potentially dilutive shares outstanding as of December 31, 2010 or 2009.
COMMITMENTS AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Liabilities for loss
contingencies arising from claims, assessments, litigation, fines and penalties
and other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment can be reasonably estimated.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
disclose the date through which subsequent events have been evaluated and that
date is the date when the financial statements were issued.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-06 "FAIR VALUE MEASUREMENTS AND DISCLOSURES (TOPIC 820) IMPROVING
DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS", which provides amendments to
Subtopic 820-10 that requires new disclosures as follows:
9
1. Transfers in and out of Levels 1 and 2. A reporting entity should disclose
separately the amounts of significant transfers in and out of Level 1 and
Level 2 fair value measurements and describe the reasons for the transfers.
2. Activity in Level 3 fair value measurements. In the reconciliation for fair
value measurements using significant unobservable inputs (Level 3), a
reporting entity should present separately information about purchases,
sales, issuances, and settlements (that is, on a gross basis rather than as
one net number).
This Update provides amendments to Subtopic 820-10 that clarify existing
disclosures as follows:
1. Level of disaggregation. A reporting entity should provide fair value
measurement disclosures for each class of assets and liabilities. A class
is often a subset of assets or liabilities within a line item in the
statement of financial position. A reporting entity needs to use judgment
in determining the appropriate classes of assets and liabilities.
2. Disclosures about inputs and valuation techniques. A reporting entity
should provide disclosures about the valuation techniques and inputs used
to measure fair value for both recurring and nonrecurring fair value
measurements. Those disclosures are required for fair value measurements
that fall in either Level 2 or Level 3.
This Update also includes conforming amendments to the guidance on employers'
disclosures about postretirement benefit plan assets (Subtopic 715-20). The
conforming amendments to Subtopic 715-20 change the terminology from MAJOR
CATEGORIES of assets to CLASSES of assets and provide a cross reference to the
guidance in Subtopic 820-10 on how to determine appropriate classes to present
fair value disclosures. The new disclosures and clarifications of existing
disclosures are effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level 3 fair value
measurements. Those disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years.
In April 2010, the FASB issued ASU No. 2010-13, "COMPENSATION--STOCK
COMPENSATION (TOPIC 718): EFFECT OF DENOMINATING THE EXERCISE PRICE OF A
SHARE-BASED PAYMENT AWARD IN THE CURRENCY OF THE MARKET IN WHICH THE UNDERLYING
EQUITY SECURITY TRADES" ("ASU 2010-13"). This update provides amendments to
Topic 718 to clarify that an employee share-based payment award with an exercise
price denominated in the currency of a market in which a substantial portion of
the entity's equity securities trades should not be considered to contain a
condition that is not a market, performance, or service condition. Therefore, an
entity would not classify such an award as a liability if it otherwise qualifies
as equity. The amendments in ASU 2010-13 are effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2010.
In August 2010, the FASB issued ASU 2010-21, "ACCOUNTING FOR TECHNICAL
AMENDMENTS TO VARIOUS SEC RULES AND SCHEDULES: AMENDMENTS TO SEC PARAGRAPHS
PURSUANT TO RELEASE NO. 33-9026: TECHNICAL AMENDMENTS TO RULES, FORMS, SCHEDULES
AND CODIFICATION OF FINANCIAL REPORTING POLICIES" ("ASU 2010-21"), was issued to
conform the SEC's reporting requirements to the terminology and provisions in
ASC 805, BUSINESS COMBINATIONS, and in ASC 810-10, CONSOLIDATION. ASU No.
2010-21 was issued to reflect SEC Release No. 33-9026, "Technical Amendments to
Rules, Forms, Schedules and Codification of Financial Reporting Policies," which
was effective April 23, 2009. The ASU also proposes additions or modifications
to the XBRL taxonomy as a result of the amendments in the update.
In August 2010, the FASB issued ASU 2010-22, "ACCOUNTING FOR VARIOUS TOPICS:
TECHNICAL CORRECTIONS TO SEC PARAGRAPHS" ("ASU 2010-22"), which amends various
SEC paragraphs based on external comments received and the issuance of SEC Staff
Accounting Bulletin (SAB) No. 112, which amends or rescinds portions of certain
SAB topics. The topics affected include reporting of inventories in condensed
financial statements for Form 10-Q, debt issue costs in conjunction with a
business combination, sales of stock by subsidiary, gain recognition on sales of
business, business combinations prior to an initial public offering, loss
contingent and liability assumed in business combination, divestitures, and oil
and gas exchange offers.
10
In December 2010, the FASB issued the FASB Accounting Standards Update No.
2010-28 "INTANGIBLES--GOODWILL AND OTHER (TOPIC 350): WHEN TO PERFORM STEP 2 OF
THE GOODWILL IMPAIRMENT TEST FOR REPORTING UNITS WITH ZERO OR NEGATIVE CARRYING
AMOUNTS" ("ASU 2010-28").Under ASU 2010-28, if the carrying amount of a
reporting unit is zero or negative, an entity must assess whether it is more
likely than not that goodwill impairment exists. To make that determination, an
entity should consider whether there are adverse qualitative factors that could
impact the amount of goodwill, including those listed in ASC 350-20-35-30. As a
result of the new guidance, an entity can no longer assert that a reporting unit
is not required to perform the second step of the goodwill impairment test
because the carrying amount of the reporting unit is zero or negative, despite
the existence of qualitative factors that indicate goodwill is more likely than
not impaired. ASU 2010-28 is effective for public entities for fiscal years, and
for interim periods within those years, beginning after December 15, 2010, with
early adoption prohibited.
In December 2010, the FASB issued the FASB Accounting Standards Update No.
2010-29 "BUSINESS COMBINATIONS (TOPIC 805): DISCLOSURE OF SUPPLEMENTARY PRO
FORMA INFORMATION FOR BUSINESS COMBINATIONS" ("ASU 2010-29"). ASU 2010-29
specifies that if a public entity presents comparative financial statements, the
entity should disclose revenue and earnings of the combined entity as though the
business combination(s) that occurred during the current year had occurred as of
the beginning of the comparable prior annual reporting period only. The
amendments in this Update also expand the supplemental pro forma disclosures
under Topic 805 to include a description of the nature and amount of material,
nonrecurring pro forma adjustments directly attributable to the business
combination included in the reported pro forma revenue and earnings. The amended
guidance is effective prospectively for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2010. Early adoption is permitted.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying consolidated financial statements.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As reflected in the accompanying
financial statements, the Company had a deficit accumulated during the
development stage of $51,734 at December 31, 2010, a net loss of $9,405 and net
cash used in operating activities of $17,231 for the nine months then ended,
respectively, with no revenues earned since inception.
While the Company is attempting to generate sufficient revenues, the Company's
cash position may not be enough to support the Company's daily operations.
Management intends to raise additional funds by way of a public or private
offering. Management believes that the actions presently being taken to further
implement its business plan and generate sufficient revenues provide the
opportunity for the Company to continue as a going concern. While the Company
believes in the viability of its strategy to generate sufficient revenues and in
its ability to raise additional funds, there can be no assurances to that
effect. The ability of the Company to continue as a going concern is dependent
upon the Company's ability to further implement its business plan and generate
sufficient revenues.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
NOTE 4 - DUE TO STOCKHOLDER
The amount owing to a stockholder is unsecured, non-interest bearing and is
payable on demand.
NOTE 5 - SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet
through the date when the financial statements were issued to determine if they
must be reported. The Management of the Company determined that there were no
reportable subsequent events to be disclosed.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "common stock" refer to
the common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our", "our company"
mean Advanced Messaging Solutions Inc., a Nevada corporation, unless otherwise
indicated.
GENERAL OVERVIEW
We were incorporated in the State of Nevada on December 27, 2007. Our offices
are currently located at 2377 Gold Meadow Way, Suite 100, Gold River, CA 95670.
Our telephone number is (916) 526-2662. Our website,
www.advancedmessagingsolutions.com , is currently under construction.
We are a development stage company that has not generated any revenue and has
had limited operations to date.
From December 27, 2007 (inception) to December 31, 2010, we have incurred
accumulated net losses of $51,734. As of December 31, 2010, we had total assets
of $5,766 and total liabilities of $6,500. Based on our financial history since
inception, our independent auditor has expressed substantial doubt as to our
ability to continue as a going concern.
We intend to develop and market secure instant messaging software for desktop
computer users. Our products will be targeted toward instant messaging and file
sharing using an encrypted transmission format.
We intend to use an e-commerce approach where customers will be able to download
our products from our web site. Marketing and customer service will be driven
through the web site where we plan to offer live online support 24 hours 7 days
per week for customers around the world.
We will primarily derive revenue from the sale of our encrypted instant
messaging software.
We have begun the development of our non-functional information-only website and
have commenced planning for the development of our software. We have also
identified a developer and management is working with them to design our
12
database. We expect to have our non-functional information-only website
operational by the end of April 2011. We have begun the full development of our
software. Further, we have researched the market for computer servers and a web
hosting service, and we have identified office space that we deem adequate,
although no formal written agreements have been entered into. We will commence
our marketing efforts upon the development of our downloadable client software.
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AS COMPARED
TO THE THREE MONTHS ENDED SEPTEMBER 30, 2009
Three Months Ended
December 31,
2010 2009
-------- --------
Revenue $ 0 $ 0
Expenses $ 3,510 $ 2,641
Net (Loss) $ 3,510 $ 2,641
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 AS COMPARED TO
THE SIX MONTHS ENDED SEPTEMBER 30, 2009
Nine Months Ended
December 31,
2010 2009
-------- --------
Revenue $ 0 $ 0
Expenses $ 9,405 $ 25,243
Net (Loss) $ 9,405 $ 25,243
EXPENSES
Our total expenses for the three month periods ended September 30, 2010 and 2009
are outlined in the table below:
Three Months Ended
December 31,
2010 2009
-------- --------
General and administrative $ 1,500 $ 249
Professional fees $ 2,010 $ 2,392
Expenses for the three months ended December 31, 2010 increased by $2,641 as
compared to the comparative period in 2009 primarily as a result of the Company
booking an over-accrual of professional fees in the period ended September 30,
2009 which resulted in reported professional fees for three months ended
December 31, 2009 being low.
Our total expenses for the nine month periods ended December 31, 2010 and 2009
are outlined in the table below:
Nine Months Ended
December 31,
2010 2009
-------- --------
General and administrative $ 5,655 $ 4,882
Professional fees $ 3,750 $ 20,361
13
Expenses for the nine months ended December 31, 2010 decreased by $15,838 as
compared to the comparative period in 2009 primarily as a result of the Company
implementing a cash conservation strategy while attempting to raise additional
funds to continue the business strategy.
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the upcoming quarter.
EQUITY COMPENSATION
We currently do not have any stock option or equity compensation plans or
arrangements.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
December 31, March 31, Increase/
2010 2010 (Decrease)
-------- -------- --------
Current Assets $ 5,766 $ 20,371 $(14,605)
Current Liabilities $ 6,500 $ 11,700 $ (5,200)
Working Capital (Deficiency) $ (734) $ 8,671 $ (9,405)
CASH FLOWS
Nine Months Nine Months
Ended Ended
December 31, December 31,
2010 2009
-------- --------
Net Cash Used in Operating Activities $(17,231) $(23,693)
Net Cash Provided by Investing Activities $ 0 $ 0
Net Cash Provided by Financing Activities $ 0 $ 0
Net Increase in Cash During the Period $(17,231) $(23,693)
We estimate that we will spend approximately $40,000 on operating expenses over
the next 12 months. Specifically, we estimate our operating expenses and working
capital requirements for the next 12 months to be as follows:
ESTIMATED OPERATING EXPENSES DURING THE NEXT 12 MONTHS
Expense Amount
------- --------
Legal/Accounting $ 4,000
Marketing $ 8,500
Software development $ 18,500
Other operation expenses $ 5,000
--------
TOTAL $ 35,000
========
CASH ON HAND, DECEMBER 31, 2010 $ 2,900
14
Cash on hand was $2,900 as of December 31, 2010, which is a decrease of $17,231
or 86% from our cash on hand of $20,131 at March 31, 2010. Our cash decreased
from our previous fiscal year in order to pay for legal fees and accounting
associated with our Form S-1, miscellaneous office charges including rent and
supplies and filing fees. Accordingly, we will require additional funds to fund
our budgeted expenses over the next 12 months. These funds may be raised through
a public or private offering(s), equity financing, debt financing, or other
sources, which may result in further dilution in the equity ownership of our
shares. There is still no assurance that we will be able to maintain operations
at a level sufficient for an investor to obtain a return on his investment in
our common stock. Further, we may continue to be unprofitable. We need to raise
additional funds in the immediate future in order to proceed with our budgeted
expenses. At this time, we cannot provide investors with any assurance that we
will be able to raise sufficient funding to meet our obligations over the next
twelve months. We do not have any arrangements in place for any future debt or
equity financing.
We are not aware of any known trends, demands, commitments, events or
uncertainties that will result in or that are reasonably likely to result in our
liquidity increasing or decreasing in any material way.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
GOING CONCERN
The report of our independent registered accounting firm expresses concern about
our ability to continue as a going concern based on the absence an established
source of revenue, recurring losses from operations, and our need for additional
financing in order to fund our operations in 2011. Please see footnote 3 to our
financial statements for additional information.
We need to raise additional funds in the immediate future in order to proceed
with our budgeted expenses. These funds may be raised through a public or
private offering(s), equity financing, debt financing, or other sources, which
may result in further dilution in the equity ownership of our shares. At this
time, we cannot provide investors with any assurance that we will be able to
raise sufficient funding to meet our obligations over the next twelve months. We
do not have any arrangements in place for any future debt or equity financing.
Should our original business plan fail, we anticipate that the selection of a
business opportunity in which to participate will be complex and without
certainty of success. Management believes that there are numerous firms in
various industries seeking the perceived benefits of being a publicly registered
corporation. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. We can provide no assurance that we will be
able to locate compatible business opportunities.
OFF-BALANCE SHEET ARRANGEMENTS
We have no 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 stockholders.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with the accounting principles generally accepted in the United States of
America. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. These estimates and assumptions are affected by
management's application of accounting policies. We believe that understanding
the basis and nature of the estimates and assumptions involved with the
following aspects of our financial statements is critical to an understanding of
our financial statements.
15
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") for interim financial information, and
with the rules and regulations of the United States Securities and Exchange
Commission ("SEC") of Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP
for complete financial statements. The unaudited interim financial statements
furnished reflect all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. Unaudited interim results are not
necessarily indicative of the results for the full fiscal year ended March 31,
2011. These financial statements should be read in conjunction with our audited
financial statements for the fiscal year ended March 31, 2010 and notes thereto
contained in the information as part of our Registration Statement on Form S-1
filed with the SEC on June 18, 2009, as amended and supplemented, which was
declared effective on October 28, 2009 (File No. 333-160069).
DEVELOPMENT STAGE COMPANY
We are a development stage company as defined by section 810-10-20 of the FASB
Accounting Standards Codification. We are still devoting substantially all of
our efforts on establishing the business and our planned principal operations
have not commenced. All losses accumulated since inception have been considered
as part of our exploration stage activities.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Due to the limited level of operations, we have not had to make material
assumptions or estimates other than the assumption that the Company is a going
concern.
FISCAL YEAR END
We have elected March 31 as our fiscal year ending date.
CASH EQUIVALENTS
We consider all highly liquid investments with maturities of three months or
less at the time of purchase to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph
820-10-35-37") to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, Paragraph
820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three (3) broad levels. The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in
active markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The three (3) levels of fair value hierarchy defined by
Paragraph 820-10-35-37 are described below:
16
Level 1 Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
The carrying amounts of the Company's financial assets and liabilities, such as
cash, prepaid expenses, accrued expenses and due to stockholder, approximate
their fair values because of the short maturity of these instruments. The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at June
30, 2010 and 2009, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the interim period ended June 30, 2010 and 2009.
REVENUE RECOGNITION
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned less estimated future doubtful accounts. The
Company considers revenue realized or realizable and earned when all of the
following criteria are met: (i) persuasive evidence of an arrangement exists,
(ii) the product has been shipped or the services have been rendered to the
customer, (iii) the sales price is fixed or determinable, and (iv)
collectability is reasonably assured.
INCOME TAXES
The Company follows Section 740-10-30 of the FASB Accounting Standards
Codification, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred tax assets
and liabilities are based on the differences between the financial statement and
tax bases of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. Deferred tax assets are
reduced by a valuation allowance to the extent management concludes it is more
likely than not that the assets will not be realized. Deferred tax assets 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 the Statements of Operations in the period
that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25.addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures. The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
Section 740-10-25.
FIN 48 also provides guidance on de-recognition, classification, interest and
penalties on income taxes, accounting in interim periods and requires increased
disclosures. The Company had no material adjustments to its liabilities for
unrecognized income tax benefits according to the provisions of FIN 48.
NET LOSS PER COMMON SHARE
Net loss per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification. Basic net loss per share is computed by
17
dividing net loss by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per share is computed by
dividing net loss by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during each period. There were no
potentially dilutive shares outstanding as of June 30, 2010 and 2009.
RECENT ACCOUNTING PRONOUNCEMENTS
Management does not believe that any recently issued, but not yet effective
accounting standards if currently adopted could have a material effect on the
accompanying financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 4T. CONTROLS AND PROCEDURES.
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (who is acting as our
principal executive officer) and our chief financial officer (who is acting as
our principal financial officer and principal accounting officer) to allow for
timely decisions regarding required disclosure. In designing and evaluating our
disclosure controls and procedures, our management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and our
management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
As of December 31, 2010, the end of the three-month period covered by this
Quarterly Report, we carried out an evaluation, under the supervision and with
the participation of our management, including our president and our chief
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our president and
our chief financial officer concluded that our disclosure controls and
procedures were effective as of the end of the period covered by this quarterly
report.
There have been no significant changes in our internal controls over financial
reporting that occurred during the quarter ended December 31, 2010, that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, existing or pending legal proceedings against our
Company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS.
As a "smaller reporting issuer", we are not required to provide the information
required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
18
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.
Exhibits required by Item 601 of Regulation S-K
Exhibit
Number Description
- ------ -----------
3.1 Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
our Amendment No. 1 to Registration Statement on Form S-1/A (File No.
333-160069) filed on October 14, 2009).
3.2 By-laws (incorporated by reference to Exhibit 3.2 to our Registration
Statement on Form S-1 (File No. 333-160069) filed on June 18, 2009).
4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit
4.1 to our Registration Statement on Form S-1 (File No. 333-160069)
filed on June 18, 2009).
10.1 Form of Subscription Agreement related to the 2008 Regulation S private
placement (incorporated by reference to Exhibit 10.1 to our
Registration Statement on Form S-1 (File No. 333-160069) filed on June
18, 2009).
10.2 Subscription Agreement for Jaime Brodeth (incorporated by reference to
Exhibit 10.2 to our Registration Statement on Form S-1 (File No.
333-160069) filed on June 18, 2009).
10.3 Subscription Agreement for Moses Carlo Supera Paez (incorporated by
reference to Exhibit 10.3 to our Registration Statement on Form S-1
(File No. 333-160069) filed on June 18, 2009).
31.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1 Certification of Principal Executive Officer and Principal Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002*
- ----------
* Filed herewith
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ADVANCED MESSAGING SOLUTIONS INC.
(Registrant)
Dated: February 14, 2011 /s/ Jaime Brodeth
-------------------------------------------
Jaime Brodeth
President and Director (Principal Executive
Officer, Principal Accounting Officer and
Principal Financial Officer)
20
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
3.1 Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
our Amendment No. 1 to Registration Statement on Form S-1/A (File No.
333-160069) filed on October 14, 2009).
3.2 By-laws (incorporated by reference to Exhibit 3.2 to our Registration
Statement on Form S-1 (File No. 333-160069) filed on June 18, 2009).
4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit
4.1 to our Registration Statement on Form S-1 (File No. 333-160069)
filed on June 18, 2009).
10.1 Form of Subscription Agreement related to the 2008 Regulation S private
placement (incorporated by reference to Exhibit 10.1 to our
Registration Statement on Form S-1 (File No. 333-160069) filed on June
18, 2009).
10.2 Subscription Agreement for Jaime Brodeth (incorporated by reference to
Exhibit 10.2 to our Registration Statement on Form S-1 (File No.
333-160069) filed on June 18, 2009).
10.3 Subscription Agreement for Moses Carlo Supera Paez (incorporated by
reference to Exhibit 10.3 to our Registration Statement on Form S-1
(File No. 333-160069) filed on June 18, 2009).
31.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1 Certification of Principal Executive Officer and Principal Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002*