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U.S. Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10-Q

 

[X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2011.

 

[  ] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______

 

Commission File Number: 000-52670

 

BMX DEVELOPMENT CORP.

(Exact name of small business issuer as specified in its charter)

 

FLORIDA 20-2089854
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)  

 

19720 Jetton Road, 3rd Floor

Cornelius, North Carolina 28031

(Address of principal executive offices)

 

704-892-8733

(Issuer's telephone number)

 

Indicate by check mark whether the registrant (1) 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 Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). []

 

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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ¨  
Non-accelerated filer  ¨
Accelerated filer  ¨
Smaller reporting company  þ

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the exchange act).

[ ]

 

Number of shares of common stock outstanding as of May 10, 2011: 4,914,500

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

 

The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Consolidated Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.

 

(1)

 

 

 

TABLE OF CONTENTS

 

 

PART I  Page No.
   
Item 1.  Consolidated Financial Statements  3
   
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations  13
   
Item 3.  Quantitative and Qualitative Disclosures About Market Risk 16
   
Item 4. Controls and Procedures 17
   
PART II    
   
Item 1.  Legal Proceedings 18
   
Item 1A. Risk Factors 18
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 18
   
Item 3.  Defaults Upon Senior Securities 18
   
Item 4.  Submission of Matters to a Vote of Security Holders 18
   
Item 5.  Other Information 18
   
Item 6.  Exhibits 18

 

 

(2)

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

 

INDEX TO BMX DEVELOPMENT CORP. CONSOLIDATED FINANCIAL STATEMENTS

 

BMX Development Corp   Page 
      
 Consolidated Balance Sheets   4 
      
 Consolidated Statements of Operations   5 
      
 Consolidated Statement of Stockholders’ Equity   6 
      
 Consolidated Statements of Cash Flows   7 
      
 Notes to Consolidated Financial Statements   8 

 

(3)

 

 

 

BMX DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2011 AND DECEMBER 31, 2010
       
       
    (unaudited)    (audited) 
ASSETS   03/31/2011    12/31/2010 
           
CURRENT ASSETS:          
Cash and cash equivalents  $96,208   $100,398 
Inventory   13,050    13,050 
TOTAL CURRENT ASSETS   109,258    113,448 
           
FIXED ASSETS:          
Machinery and equipment   65,000    65,000 
Accumulated depreciation   (62,833)   (62,833)
TOTAL FIXED ASSETS   2,167    2,167 
           
TOTAL ASSETS  $111,425   $115,615 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Current portion of note payable - bank  $2,303   $2,303 
Accrued expenses   1,850    5,075 
Customer deposit   14,700    14,700 
Loan payable - related party   5,000    5,000 
TOTAL CURRENT LIABILITIES   23,853    27,078 
           
LONG-TERM LIABILITIES          
Note payable - bank   —      —   
TOTAL LONG-TERM LIABILITIES   —      —   
           
STOCKHOLDERS' EQUITY          
Common stock ($.001 par value, 200,000,000 shares authorized; 4,914,500 common shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively)   4,915    4,915 
Additional paid in capital   265,761    263,061 
Common stock warrants   15,768    15,768 
Retained deficit   (198,872)   (195,207)
TOTAL STOCKHOLDERS' EQUITY   87,572    88,537 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $111,425   $115,615 
           
The accompanying notes are an integral part of these consolidated financial statements

 

 

(4)

 

 

BMX DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
       
       
(Unaudited)  For the Three Months
   Ended March 31,
   2011  2010
REVENUES:          
Sales  $1,223   $450 
Cost of sales   (400)   (181)
Gross profit   823    269 
           
EXPENSES:          
Rent expense   2,700    2,700 
Selling, general and administrative expenses   1,713    2,259 
Total expenses   4,413    4,959 
           
Loss from operations  $(3,590)  $(4,690)
           
Interest expense   (75)   (410)
           
Loss before income taxes   (3,665)   (5,100)
           
Provision for income taxes   —      —   
           
NET LOSS  $(3,665)  $(5,100)
           
Basic and fully diluted net loss per common share:   **    ** 
           
Weighted average common shares outstanding   4,914,500    4,914,500 
           
** Less than $.01          
           
           
The accompanying notes are an integral part of these consolidated financial statements

 

 

 

(5)

 

 

BMX DEVELOPMENT CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2011

 

(Unaudited)

 

          Additional   Common      Total
    Common Stock   Paid-in  Stock   Retained  Stockholder's
   Shares  Amount  Capital  Warrants  Deficit  Equity
                   
Balances, January 1, 2011   4,914,500   $4,915   $263,061   $15,768   $(195,207)  $88,537 
                               
Fair value of rent contributed by related party   —      —      2,700    —      —      2,700 
                               
Net loss for the three months ended March 31, 2011   —      —      —      —      (3,665)   (3,665)
                               
Balances, March 31, 2011   4,914,500   $4,915   $265,761   $15,768   $(198,872)  $87,572 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 

 

(6)

 

 

BMX DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
       
       
   (unaudited)  (unaudited)
   2011  2010
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net (loss)  $(3,665)  $(5,100)
Adjustments to reconcile (net loss) to net cash          
   (used in) operations:          
     Fair value of rent contributed by related party   2,700    2,700 
Increase (decrease) in operating liabilities          
Accrued expenses   (3,225)   1,075 
NET CASH (USED IN) OPERATING ACTIVITIES   (4,190)   (1,325)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Principal repayments of bank note payable   —      (348)
NET CASH (USED IN) FINANCING ACTIVITIES   —      (348)
           
NET (DECREASE) IN CASH AND CASH EQUIVALENTS   (4,190)   (1,673)
           
CASH AND CASH EQUIVALENTS,          
BEGINNING OF THE PERIOD   100,398    106,473 
           
END OF THE PERIOD  $96,208   $104,800 
           
           
           
The accompanying notes are an integral part of these consolidated financial statements

 

 

 

(7)

 

 

 

BMX DEVELOPMENT CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Business Activity

BMX Development Corp., FKA Biometrix International Inc., (the “Company”) is a street and off-road motorcycle servicing and repair company located in the Charlotte, North Carolina area. The Company was certified as incorporated in the State of Florida officially on January 3, 2005 although the articles of incorporation were filed on December 28, 2004. Accordingly, under Florida Statutes 607.0203, the effective date for corporate existence was December 28, 2004, within five business days of the certification thereto.

 

On May 30, 2007, we filed an amendment to the Articles of Incorporation with the Secretary of State of Florida to change our corporate name to BMX Development Corp. (“BMX”)

 

On April 27, 2007, we acquired our sole wholly-owned subsidiary, Johnson High Performance, Inc. ("JHP"). After the acquisition, we changed our corporate name to BMX Development Corp. as mentioned above and began the business for motorcycle repairs.

 

On April 27, 2007, the Company (legal acquirer) executed a Plan of Exchange with JHP (accounting acquirer), the sole shareholder of JHP, pursuant to which BMX issued the new 200,000 common shares to Dean A. Stewart, sole shareholder of JHP, pursuant to Regulation D under the Securities Act of 1933, as amended, in exchange for all of the common shares of JHP. As a result, JHP became the wholly-owned subsidiary of the Company.

 

The above mentioned stock exchange transaction was accounted for as a reverse acquisition and recapitalization of the Company whereby JHP was deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer). The accompanying consolidated financial statements are in substance those of JHP, with the assets and liabilities, and revenues and expenses, of BMX being included effective from the date of stock exchange transaction. BMX is deemed to be a continuation of the business of JHP. Accordingly, the accompanying consolidated financial statements include the following:

 

(1) The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting acquiree at historical cost;

 

(2) the financial position, results of operations, and cash flows of the acquirer for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of stock exchange transaction.

 

Accounting Basis

The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a December 31 fiscal year end.

 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary, Johnson High Performance, Inc. All material intercompany accounts and transactions have been eliminated in consolidation.

 

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At March 31, 2011, the Company had $96,208 of unrestricted cash to be used for future business operations.

 

(8)

BMX DEVELOPMENT CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

 

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Fair Value of Financial Instruments

The Company's financial instruments consist of cash, inventory, accrued expenses, customer deposit, a note payable – bank, and an amount due to a related party. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial.

 

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

 

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of March 31, 2011, there have been no interest or penalties incurred on income taxes.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

Basic (Loss) Per Share

Basic (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Common share equivalents totaling 18,500 at March 31, 2011 and 2010 representing outstanding warrants were not included in the computation of diluted earnings per share for the three months ended March 31, 2011 and 2010, as their effect would have been anti-dilutive.

 

 

 

(9)

 

 

 

BMX DEVELOPMENT CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

 

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Stock-Based Compensation

The Company uses the modified prospective method of accounting for stock-based compensation. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the estimated grant-date fair value. As of March 31, 2011, the Company has not issued any stock-based payments to its employees.

 

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. As of March 31, 2011, the Company has not issued any stock-based payments to consultants or other non-employees.

 

Recent Accounting Pronouncements

BMX does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

 

Research and Development Costs

Pursuant to SFAS No. 2 (ASC 730-10), "Accounting for Research and Development Costs," it is the Company’s policy to expense research and development costs. No research and development costs have been incurred to date.

 

NOTE 2 – INVENTORY AND CUSTOMER DEPOSIT

 

Inventory consists of a motorcycle, and is stated at the lower of cost or market. The Company has been contracted to customize the motorcycle, and has received a $14,700 deposit from the customer.

 

NOTE 3 - PROPERTY AND EQUIPMENT

 

Property and equipment is stated at cost. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment.

 

When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations.

 

The Company recognizes an impairment loss on property and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of the asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets.

 

Depreciation expense was $-0- for the three months ended March 31, 2011 and 2010, respectively.

 

 

(10)

 

BMX DEVELOPMENT CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

 

 

NOTE 4 – ACCRUED EXPENSES

 

Accrued expenses consisted of the following at March 31, 2011 and December 31, 2010:

 

   2011  2010
Professional fees  $700   $4,000 
Interest   1,150    1,075 
 Total Accrued expenses  $1,850   $5,075 

 

NOTE 5 – NOTE PAYABLE - BANK

 

The Company has a term bank note payable bearing annual interest of 9.50% as of March of 2011, secured by equipment with a net book value of $2,167. The original amount of the note was $9,900 to be repaid in eighty-four monthly payments of principal and interest of $168 with maturity in December 2011.

 

Principal maturities of the bank note payable as of March 31, 2011 are as follows:

 

   Amount
2011  $2,303 
Total  $2,303 

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

The company has received advances from a shareholder totaling $5,000. The loans bear interest at 6%, are unsecured, and have no specific terms of repayment.

 

The Company also has an oral, month-to-month lease with an individual related to the Company’s Vice President. The lease is gratuitous and consists of approximately 1,100 square feet of space including a bay area, shop and office. The financial statements herein include the imputed fair value of the space at $900 per month based upon comparables in the area.

 

NOTE 7 – STOCKHOLDERS’ EQUITY

 

The Company is authorized to issue 200,000,000 common shares at $.001 par value per share.

 

During the year ended December 31, 2009, the Company issued 18,500 common shares at $2.00 per share for proceeds of $37,000 from the sale thereof pursuant to a private placement to unrelated third party accredited investors made under Regulation 504. The Company also issued 18,500 warrants in connection with the transaction.

 

The Company records the fair value of rent of its operational and headquarters provided by a related party in the amount of $900 per month as a charge to current period rent expense and a credit to additional paid in capital.

 

 

 

 

(11)

 

 

BMX DEVELOPMENT CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

 

NOTE 8 – WARRANTS

 

The Company issued 18,500 stock warrants as part of the sale of common shares under a private placement to unrelated third parties in 2009. The warrants were fair valued at $15,768. The fair market value was calculated using the Black-Scholes options pricing model at grant date using the following assumptions. A stock price of $2.05, exercise price of $2.00, risk-free interest rate of 1.28%, 0% dividend yield, 60% volatility rate, and an expected life of 3 years. No warrants were issued or exercised during the three months ended March 31, 2011 and 2010, respectively.

 

NOTE 9 – INCOME TAXES

 

For the three months ended March 31, 2011 and 2010, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $195,207 at March 31, 2011, and will begin to expire in the year 2024.

 

The provision for Federal income tax consists of the following at December 31, 2010 and at March 31, 2011:

 

   2010  2011
Federal income tax attributable to:          
Current operations  $6,000   $1,246 
Less: valuation allowance   (6,000)   (1,246)
Net provision for Federal income taxes  $—     $—   

 

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

 

   2010  2011
Deferred tax asset attributable to:          
Net operating loss carryover  $66,370   $67,616 
Less: valuation allowance   (66,370)   (67,616)
Net deferred tax asset  $—     $—   

 

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

 

NOTE 10 - COMMITMENTS AND CONTINGINCIES

 

The Company has an oral, month-to-month lease with an individual related to the Company’s Vice President. The lease is gratuitous and consists of approximately 1,100 square feet of space including a bay area, shop and office. The financial statements herein include the imputed fair value of the space at $900 per month based upon comparables in the area. There is no obligation for the officer to continue this arrangement.

 

The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.

  

NOTE 11 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through May 10, 2011, the date on which the financial statements were issued, and has determined it does not have any material subsequent events to disclose.

 

 

 

(12)

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATION

 

As used herein the terms "we", "us", "our," the “Registrant,” “BMX” and the "Company" means, BMX Development Corp., a Florida corporation. These terms also refer to our wholly-owned subsidiary corporation, Johnson High Performance, Inc. (“JHP”), organized and existing under the laws of North Carolina on September 1, 2004, acquired on April 27, 2007.

 

GENERAL DESCRIPTION OF BUSINESS

We were incorporated on December 28, 2004 under the name Biometrix International, Inc. On May 30, 2007, we filed an amendment to the Articles of Incorporation with the Secretary of State of Florida to change our corporate name to BMX Development Corp. On April 27, 2007, we acquired our sole wholly-owned subsidiary, Johnson High Performance, Inc. ("JHP"). After the acquisition, we changed our corporate name to BMX Development Corp. as mentioned above and began the business for motorcycle repairs.

 

On April 27, 2007, BMX (legal acquirer) executed a Plan of Exchange with JHP (accounting acquirer), the sole shareholder of JHP, pursuant to which BMX issued the new 200,000 common shares to Dean A. Stewart, sole shareholder of JHP, pursuant to Regulation D under the Securities Act of 1933, as amended, in exchange for all of the common shares of JHP. As a result, JHP became the wholly-owner subsidiary of BMX.

 

The above mentioned stock exchange transaction has been accounted for as a reverse acquisition and recapitalization of BMX whereby JHP is deemed to be the accounting acquirer (legal acquiree) and BMX to be the accounting acquiree (legal acquirer). The accompanying consolidated financial statements are in substance those of JHP, with the assets and liabilities, and revenues and expenses, of BMX being included effective from the date of stock exchange transaction. BMX is deemed to be a continuation of the business of JHP. Accordingly, the accompanying consolidated financial statements include the following:

 

(1) The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting acquiree at historical cost;

 

(2) the financial position, results of operations, and cash flows of the acquirer for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of stock exchange transaction.

 

Since the completion of the Plan of Exchange, which was on April 27, 2007, we have continued operations of JHP. Prior to the merger with JHP, we were an inactive, dormant shell corporation. We had been dormant since December 2004 with operations consisting of only organizational activities. Management decided that the repair and servicing of motor cycles would be beneficial, thus we acquired a business in this field.

 

Our operations primarily involve street and off-road motorcycle servicing and repair, specializing in affordable brand name and after-market replacement products. Through our emphasis on budget pricing and high quality service, we have developed a market in the motorcycle service industry in the local Charlotte, North Carolina area and a fifty mile surrounding area. We currently operate one office and one service bay area that is maintained by a management team of two individuals. The present geographic area we operate in includes primarily the Mecklenburg County, and Iredell County areas of North Carolina. Our subsidiary’s phone number is (336) 992-0241. This is the number used by customers and for all other business related matters.

 

Marketing for our services is accomplished through print ads in newspapers as well as wholesale referrals. Additionally, we utilize a network of motor cycle owners and obtain business through networking with them.

 

The motorcycle repair service industry is highly competitive with respect to price, service, quality, and location. There are numerous competitors in the motorcycle repair servicing industry that possess substantially greater financial, marketing, personnel and other resources. There can be no assurance that we will be able to respond to various competitive factors affecting the business. We plan to gain a competitive advantage over our competitors in the motorcycle repair servicing industry by offering quality services at a low price.

 

We believe our quality and good customer service will differentiate our services from our competitors. For example, many of our listed prices currently match or are lower than the advertised prices of our major competitors. Also, we offer next day servicing on our repairs and our customer service professionals have an average of five years in the motorcycle industry which allows them to better serve our customers. However, since many of our competitors have greater brand loyalty and more capital resources than we do, there can be no assurance we will be successful in gaining that competitive advantage in our marketplace.

 

 

(13)

 

Our main markets are individual retail customers and wholesale buyers and no single customer makes up more than ten percent of our total revenues. We do not expect that this will change in the future.

 

We have two full-time employees. We also have two management consultants that are each independently contracted by us to service and provide financial consulting and services.

 

Our service line consists primarily of the following:

 

·        Air filters

·        Air shifters

·        Carburetors

·        Chains

·        Cylinders

·        Exhaust systems

·        Fuel valves

·        Gaskets

·        Ignitions

·        Piston kits

·        Race engine valves

·        RPM limiters

·        Throttle assemblies

·        Tires

·        Transmission and clutch parts

·        Valves

·        Velocity stacks

·        Wheels

 

We provide installation services for these products.

 

No single customer accounts for more than ten percent of our business. At the present time there is no need for governmental approvals, though this may change in the future.

 

Servicing

 

Our tool inventory consists of products which we purchase from wholesalers. Of our 200 total square feet of facility, 100 square feet is dedicated to accounting, administration, billing, etc. We do provide installation and repair services from this facility.

 

Pricing

 

The price range of motor cycle replacement parts varies from market to market, affected by several factors including brand recognition, marketing strategies, quality, warranties, payment terms etc. A strategy primarily focused on being the lowest price typically results in more intense competition and lower profit margin. Therefore, on many of our services we offer multiple value choices in a good/better/best assortment, with appropriate price and quality differences from the “good” products to the “better” and “best” products. We believe that our overall prices compare favorably to those of our competitors.

 

Marketing

 

We believe that targeted advertising and marketing play important roles in succeeding in today’s environment. We will constantly work to understand our customers’ wants and needs so that we can build long-lasting, loyal relationships. We plan to utilize marketing and advertising primarily to advise customers about the overall importance of motor cycle maintenance, our great value and the availability of high quality service and parts. We are attempting to develop a targeted ‘loyalty program’ as a marketing method of driving new traffic to us. The basic idea of a ‘loyalty program’ is providing incentive discounts to the repeat customers. We will store up our customers' purchase records and set up guidelines to identify qualified customers. Such guidelines may include the total amount spent on repairs, or total visits for our services. For example, we may provide a 10% discount to customers whose total yearly spending exceeds $1,000. The loyalty program is still under development. We believe such incentives will appeal to our targeted customers including garages, service stations and other mechanics that repeatedly purchase use our services. To increase average sales dollars per transaction, we utilize creative promotional materials to increase the chance of up-selling and cross-selling opportunities.

 

 

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Purchasing and Supply Chain

 

Replacement parts are selected and purchased from various vendors locally. We currently have several primary suppliers including Kustomwerks and Zippers. Neither of them are related parties. We typically assemble a list of replacement parts and products we need and phone or fax our orders into our suppliers on a daily basis. Most replacement parts and products are delivered to us the same day. We do not have any written distributors agreements with any of our suppliers. If we lost any of our suppliers, we believe we will be able to replace them with a comparable supplier without a material disruption to our business. However, we believe that we currently have good relationships with our suppliers.

 

Environmental Law Compliance

 

There are no current existing environmental concerns for our services. If this changes in the future, we make every effort to comply with all such applicable regulations.

 

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

 

The following discussion should be read in conjunction with the consolidated financial statements included in this report and is qualified in its entirety by the foregoing.

 

FORWARD LOOKING STATEMENTS

 

Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis" and the Notes to Consolidated Financial Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and uncertainties that may be outside our control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, the realization of our deferred tax assets, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements.

 

Revenues

 

Sales were $1,223 and $450 for the three months ended March 31, 2011 and 2010, respectively. Sales revenues were due primarily to motorcycle repairs and maintenance.

 

Gross profits were $823 and $269 for the three months ended March 31, 2011 and 2010, respectively. Sales revenues were due primarily to motorcycle repairs and maintenance.

 

Income / Loss

 

We had net losses of $3,665 and $5,100 for the three months ended March 31, 2011 and 2010, respectively. The net losses in these periods were primarily due to small sales.

 

Expenses

 

Operating expenses for the three months ended March 31, 2011 and 2010 were $4,413 and $4,959, respectively. The decrease was mainly attributable to the decrease in expenditures in difficult economic times.

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Cost of Sales

 

Cost of revenue primarily includes sales of purchased motor cycle parts inventory. During the three months ended March 31, 2011, we had cost of revenues of $400, or approximately 33% of revenues, and $181 for the three months ended March 31, 2010, or approximately 40%. The cost of revenue as a percentage of revenue stayed miniscule with costs of parts and labor staying constant during the three-month period ended March 31, 2011, given the small amount of sales and related cost. 

 

Impact of Inflation

 

We believe that inflation has had a negligible effect on operations during the three months ended March 31, 2011 and 2010. We believe that we can offset inflationary increases in the cost of revenue by increasing revenue and improving operating efficiencies.

 

Liquidity and Capital Resources

 

Net cash flows provided by (used in) operating activities were $(4,190) and $(1,325) for the three months ended March 31, 2011 and 2010, respectively, primarily attributable to a net loss, which were $3,665 and $5,100 for the three months ended March 31, 2011 and 2010, fair value of rent provided in the amount of $2,700, and decreases in accrued expense in March 31, 2011.

 

There were no cash flows from investing activities for the three months ended March 31, 2011 and 2010.

 

Net cash flows provided by (used in) financing activities were $0 and $(348) for the three months ended March 31, 2011 and 2010, attributable to principal repayments on our note payable to the bank in the amount of $0 and 348 for the three months ended March 31, 2011 and 2010.

 

On March 31, 2011, we had cash of $96,208 on hand. We do not have or anticipate having within the next 12 months any cash flow or liquidity problems and we are not in default or in breach of our note or lease or other indebtedness or financing arrangement requiring us to make payments.

 

No significant amount of our trade payables has been unpaid within the stated trade term. We are not subject to any unsatisfied judgments, liens or settlement obligations.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The information to be reported under this item is not required of smaller reporting companies.

 

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ITEM 4. CONTROLS AND PROCEDURES

 

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and its Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

 

As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

 

The Certifying Officers have also concluded, based on their evaluation of our controls and procedures that as of March 31, 2011, our internal controls over financial reporting are effective and provide a reasonable assurance of achieving their objective.

 

The Certifying Officers have also concluded that there was no change in our internal controls over financial reporting identified in connection with the evaluation that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 4T. CONTROLS AND PROCEDURES

 

(a) Conclusions regarding disclosure controls and procedures. Disclosure controls and procedures are the Company’s controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management is responsible for establishing and maintaining adequate internal control over financial reporting.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Exchange Act as of March 31, 2011, and, based on their evaluation, as of the end of such period, the our disclosure controls and procedures were effective as of the end of the period covered by the Quarterly Report,

 

(b) Management’s Report On Internal Control Over Financial Reporting. It is management’s responsibilities to establish and maintain adequate internal controls over the Company’s financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers and effected by the issuer’s 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 generally accepted accounting principles 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 issuer; and

 

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management of the issuer; and

 

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

  

As of the end of the period covered by the Quarterly Report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting.

 

Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

 

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, internal controls over financial reporting were effective as of the end of the period covered by the Report.

 

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.

 

This Quarterly Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Quarterly Report.

 

(c) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not aware of any pending or threatened legal proceedings, in which we are involved. In addition, we are not aware of any pending or threatened legal proceedings in which entities affiliated with our officers, directors or beneficial owners are involved.

ITEM 1A. RISK FACTORS

 

The information to be reported under this item has not changed since the previously filed 10-K, for the year ended December 31, 2010.

 

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

 

(1)             Exhibits:

 

Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits at the end of this Form 10-Q, which is incorporated herein by reference.

 

(2)             Reports on Form 8-K filed

 

None.

 

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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, there unto duly authorized.

 

     
  BMX DEVELOPMENT CORP.
     
Date: May 10, 2011 By:    /s/  Michael J. Bongiovanni
 

Michael J. Bongiovanni

President

 

 

 

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INDEX TO EXHIBITS

 

Exhibit No.   Description

 

31.1

 

 

 

 

Certification of Chief Executive Officer

31.2   Certification of Chief Financial Officer
     

32.1

 

 

Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2   Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002