Members, merchants and member providers (member providers are companies, organizations and groups that enroll their employees or members in the Buyrite program) may view reports on-line indicating the total amount of purchases made and of savings accumulated. At the present time, when a member elects to redeem all or any portion of the savings which he or she has accumulated, the member purchases certificates or gift cards on-line that are redeemable at participating merchants or load their accumulated savings onto our stored value MasterCard, Discover Card or participating affiliated cards that can be utilized at certain online and in-store merchants for redemption.
Our financial statements have been prepared on the basis of accounting principles applicable to a going concern. As a result, they do not include adjustments that would be necessary if we were unable to continue as a going concern and would therefore be obligated to realize assets and discharge our liabilities other than in the normal course of operations. As reflected in the accompanying financial statements, the Company is in the development stage with no revenues, has used cash flows in operations of $19,624 from inception from August 31, 2008 to December 31, 2011 and has an accumulated deficit of $75,697.
This raises substantial doubt about our ability to continue as a going concern, as expressed by our auditors in its opinion on our financial statements included in this report. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.
We have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern is dependent on us obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations. There can be no assurance that we will operate at a profit or additional debt or equity financing will be available, or if available, can be obtained on satisfactory terms.
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an on-going basis, management evaluates these estimates and assumptions, including but not limited to those related to revenue recognition and the impairment of long-lived assets, goodwill and other intangible assets. Management bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail sales to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier. Return allowances, which reduce product revenue, are estimated using historical experience. Revenue from product sales and services rendered is recorded net of sales taxes. Amounts received in advance for subscription services, are deferred and recognized as revenue over the subscription term.
The most important metric by which we judge the Company’s performance now and in the near term is top line sales growth. Our current commitment to develop and deliver quality products means that, for the near future, bottom line profitability will be a poor indicator of our success. We do not expect our development investment rate to decline meaningfully in the near future. Since investors are certain to be the primary, near term source of liquidity to support our development and marketing efforts, our liquidity will be driven by our ability to attract repeat investments from current shareholders and to find new ones. This in turn may be materially impacted by the general investment climate.
Since investors are certain to be the primary, near term source of liquidity to support our development and marketing efforts, our liquidity will be driven by our ability to attract repeat investments from current shareholders and to find new ones. This in turn may be materially impacted by the general investment climate.
Our primary marketing challenge for the coming 12 months is to achieve market awareness and acceptance of our patents currently under development.
These forward-looking statements, pertaining to revenues, are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur.
As our revenues commence, we plan to continue to invest in marketing and sales by increasing the number of direct sales consultants and management personnel, expand our selling and marketing activities, building brand awareness and sponsoring additional marketing events. We expect that in the future, marketing and sales expenses will increase in absolute dollars. We expect that in the future, marketing and sales expenses will increase in absolute dollars commencing in the fourth quarter of 2012. We do not expect our revenues to increase significantly until 2013.
General and Administrative Expenses
We expect that general and administrative expenses associated with executive compensation will increase in the future. Although our current president, vice president and chief financial officer have foregone full salary payments during the initial stages of the business, during 2011, we anticipate compensation to commence in late 2012 as revenues are generated. In addition, we believe in the 2013 fiscal year that the compensation packages required to attract the senior executives, the Company requires to execute, in accordance with its business plan, which will increase our total general and administrative expenses.
Summary of Consolidated Condensed Results of Operations
Any measurement and comparison of revenues and expenses from continuing operations should not be considered necessarily indicative or interpolated as the trend to forecast our future revenues and results of operations.
Results for the Three Months Ended December 31, 2011 and 2010
Revenues. The Company’s revenues for the three months ended December 31, 2011 and 2010 were $0. From inception (August 31, 2008) through December 31, 2011, the company did not generate any revenues.
Legal and Accounting Expenses. Legal and Accounting expenses for the three months ended December 31, 2011 were $1,500 as compared to $1,500 for the three months ended December 31, 2010. These expenses are the normal recurring expenses for the quarter including filings with the Securities and Exchange Commission.
General and Administrative Expenses. General and administrative expenses for the three months ended December 31, 2011 were $1,500 compared to $1,500 for the three months ended December 31, 2010. These expenses are the normal recurring expenses for the quarter including filings with the Securities and Exchange Commission.
Net Loss. Net loss for the three months ended December 31, 2011 was $3,000 as compared to $3,750 for the three months ended December 31, 2010. The decrease of $750 at December 31, 2011 was a direct result of amortization of intellectual properties for the period 2010. This loss is consistent with the expected quarterly loss required including keeping the company’s filings current with the Securities and Exchange Commission.
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Impact of Inflation
We believe that the rate of inflation has had negligible effect on our operations. We believe we can absorb most, if not all, increased non-controlled operating costs by increasing sales prices, whenever deemed necessary and by operating our Company in the most efficient manner possible.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate sufficient amounts of funding to meet its need for cash. Since its inception (August 31, 2008), the Company has been funded by its founders, stockholders and related parties with advances and loans and through the sale of common shares including its initial public offering. At December 31, 2011, we had a working capital deficit of ($4,197) and an accumulated deficit of ($75,697), as compared to a working capital deficit of ($9,697) and an accumulated deficit of ($72,697) at September 30, 2011.
As of December 31, 2011 and September 30, 2011, total current assets were $1.
As of December 31, 2011, total current liabilities were $4,198 represented by $4,000 of accrued expenses and $198 of loans from related parties. As of September 30, 2011, total current liabilities were $9,698, which consisted of $7,500 of accrued expenses and $2,198 of loans from related parties.
Cash flows from financing activities and cash generated through the company’s issuance of commons shares (including its initial public offering) represented the Company’s principal source of funding since August 31, 2008 (inception) through December 31, 2011.
The company on September 14, 2008 entered into a contract with an independent contractor (BSP Rewards Inc.) to provide for the internet mall including merchants, gift cards and back office accounting. The contract provides for the provider to participate as received a participation in the member’s savings. This contract was terminated by the parties since the parent company of the contractor merged as of October 19, 2010.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or any anticipate entering into any off-balance 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 are material to investors.
Recent Accounting Pronouncements
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4T. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 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 and Treasurer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
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As required by SEC Rule 13a-14(b), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our first fiscal quarter covered by this report. Based on the foregoing, our President and Treasurer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
There has been no change in our internal controls over financial reporting during our first fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceeding.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. (Removed and Reserved).
Item 5. Other Information.
Item 6. Exhibits
Rule 13a-14(a)/14d-14(a) Certification of Principal Executive Officer
Rule 13a-14(a)/14d-14(a) Certification of Principal Accounting and Financial Officer
Section 1350 Certification of Principal Executive Officer and Principal Accounting and Financial Officer
XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.
* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BUYRITE CLUB CORP.
DATE: February 14, 2012
/s/ Judith Adelstein
President, Principal Executive Officer
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