Attached files
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 APRIL 30, 2012
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER: 333-169805
BlueFlash Communications, Inc.
------------------------------
(Exact name of registrant as specified in its charter)
Florida 27-4562647
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Marissa Watson
1801 26th Street, Sacramento, CA 95816
916-396-3361
--------------------------------------
(Registrant's telephone number, including area code)
D. Brad German
1108 St. Joseph Drive, St. Joseph MI, 49085
269-208-7245
-------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 10,200,000 shares of common
stock are issued and outstanding as of April 30, 2012.
TABLE OF CONTENTS
Page
No.
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets .................................................... 4
Statements of Operations .......................................... 5
Statements of Stockholders' Equity ................................ 6
Statements of Cash Flows .......................................... 7
Notes to Financial Statements (unaudited) ......................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................. 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk ........ 13
Item 4. Controls and Procedures ........................................... 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ................................................. 16
Item 1A. Risk Factors ...................................................... 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ....... 16
Item 3. Defaults Upon Senior Securities ................................... 16
Item 4. Mine Safety Disclosures ........................................... 16
Item 5. Other Information ................................................. 16
Item 6. Exhibits .......................................................... 16
2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking
statements. These statements, identified by words such as "plan", "anticipate",
"believe", "estimate", "should", "expect" and similar expressions include our
expectations and objectives regarding our future financial position, operating
results and business strategy. These statements are subject to known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward - looking
statements. These forward-looking statements were based on various factors and
were derived utilizing numerous assumptions and other factors that could cause
our actual results to differ materially from those in the forward-looking
statements. These factors include, but are not limited to, our ability to secure
suitable financing to continue with our existing business or change our business
and conclude a merger, acquisition or combination with a business prospect,
economic, political and market conditions and fluctuations, government and
industry regulation, interest rate risk, U.S. and global competition, and other
factors. Most of these factors are difficult to predict accurately and are
generally beyond our control. You should consider the areas of risk described in
connection with any forward-looking statements that may be made herein. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. Readers should carefully review
this report in its entirety, including but not limited to our financial
statements and the notes thereto and the risks described in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2012. We advise you to carefully
review the reports and documents we file from time to time with the Securities
and Exchange Commission (the "SEC"), particularly our quarterly reports on Form
10-Q and our current reports on Form 8-K. Except for our ongoing obligations to
disclose material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events.
OTHER PERTINENT INFORMATION
When used in this report, the terms, "we," the "Company," "our," and "us" refers
to BlueFlash Communications, Inc. a Florida corporation.
3
Blueflash Communications, Inc.
(A Development Stage Company)
Balance Sheets
April 30,
2012 January 31,
Unaudited 2012
----------- ------------
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents ........................ $ 42 $ 5,745
Accounts receivable .............................. 5,200 --
----------- -----------
Total current assets ........................... $ 5,242 $ 5,745
----------- -----------
----------- -----------
TOTAL ASSETS ..................................... $ 5,242 $ 5,745
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------
CURRENT LIABILITIES
Accounts payable & Accrued liabilities ........... $ 3,600 $ --
----------- -----------
Total liabilities .............................. 3,600 --
=========== ===========
STOCKHOLDERS' EQUITY (DEFICIENCY)
Capital Stock (Note 4)
Authorized:
300,000,000 common shares, $0.0001 par value.
Issued and outstanding:
10,200,000 common shares at April 30, 2012 and
January 31, 2012 ............................. $ 1,020 $ 1,020
Additional paid-in capital ....................... 19,980 19,980
Deficit accumulated during the development stage . (19,358) (15,255)
----------- -----------
Total Stockholders' Equity (Deficiency) ........ 1,642 5,745
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....... $ 5,242 $ 5,745
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
Blueflash Communications, Inc.
(A Development Stage Company)
Statement of Operations
For the period January 11, 2011 to April 30, 2012
(unaudited)
For the Period
from Inception
For the Three For the Three January 11,
Months Ended Months Ended 2011 to
April 30, April 30, April 30,
2012 2011 2012
------------ ------------ --------------
REVENUES ....................... $ -- $ -- $ --
------------ ------------ -------------
EXPENSES
General & Administrative ..... $ 603 $ 1,040 $ 9,147
Professional Fees ............ 3,500 1,767 10,211
------------ ------------ -------------
4,103 2,807 19,358
Loss Before Income Taxes ....... $ (4,103) $ (2,807) $ (19,358)
------------ ------------ -------------
Provision for Income Taxes ..... -- -- --
------------ ------------ -------------
Net Loss ....................... $ (4,103) $ (2,807) $ (19,358)
============ ============ =============
PER SHARE DATA:
Basic and diluted loss
per common share ............ $ -- $ --
============ ============
Basic and diluted
weighted average common
shares outstanding .......... 10,200,000 9,000,000
============ ============
The accompanying notes are an integral part of these financial statements.
5
BlueFlash Communications, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficiency)
Deficit
Accumulated
Common Stock Additional Stock During the
-------------------- Paid-in Subscription Development
Shares Amount Capital Receivable Stage Total
---------- -------- ---------- ------------ ----------- ---------
Inception - January ................... -- $ -- $ -- $ -- $ -- $ --
Common shares issued to Founder for
cash at $0.001 per share (par value
$0.0001) on January 11, 2011 ........ 9,000,000 900 8,100 (1,000) -- 8,000
Net (loss) ............................ -- -- -- -- (3,600) (3,600)
---------- -------- ---------- ------------ ----------- ---------
Balance - January 31, 2011 ............ 9,000,000 900 8,100 (1,000) (3,600) 4,400
========== ======== ========== ============ =========== =========
Private Placement of 1,200,000
Common Shares ($0.0001 par value) on
June 24, 2011 @ $0.01 per share ..... 1,200,000 120 11,880 -- -- 12,000
Stock Subscription .................. -- -- -- 1,000 -- 1,000
Loss for the year ended January 2012 .. -- -- -- -- (11,655) (11,655)
---------- -------- ---------- ------------ ----------- ---------
Balance for the year ended January 2012 10,200,000 1,020 19,980 -- (15,255) 5,745
---------- -------- ---------- ------------ ----------- ---------
Loss for the quarter ended April, 2012 -- -- -- -- (4,103) (4,103)
---------- -------- ---------- ------------ ----------- ---------
Balance - April 30, 2012 .............. 10,200,000 1,020 19,980 -- (19,358) 1,642
========== ======== ========== ============ =========== =========
The accompanying notes are an integral part of these financial statements.
6
BlueFlash Communications, Inc.
(A Development Stage Company)
Statement of Cash Flow
For the period January 11, 2011 to April 30, 2012
(unaudited)
For the Period
from Inception
For the Three For the Three January 11,
Months Ended Months Ended 2011 to
April 30, April 30, April 30,
2012 2011 2012
------------ ------------ --------------
OPERATING ACTIVITIES
Net Loss ..................................... $ (4,103) $ (2,807) $ (19,358)
------------ ------------ -------------
Changes in Operating Assets and Liabilities:
Increase (decrease) in accounts payable and
accrued liabilities ....................... (1,600) (3,073) (1,600)
------------ ------------ -------------
Net cash used in operating activities ........ (5,703) (5,880) (20,958)
------------ ------------ -------------
FINANCING ACTIVITIES
Common stock issued for cash ................. -- 1,000 21,000
------------ ------------ -------------
Net cash provided by financing activities .... -- 1,000 21,000
------------ ------------ -------------
INCREASE IN CASH AND CASH EQUIVALENTS .......... (5,703) (4,880) 42
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,745 8,000 --
------------ ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..... $ 42 $ 3,120 $ 42
============ ============ =============
Supplemental Cash Flow Disclosures:
Cash paid for:
Interest expense ........................... $ -- $ -- $ --
============ ============ =============
Income taxes ............................... $ -- $ -- $ --
============ ============ =============
The accompanying notes are an integral part of these financial statements.
7
BlueFlash Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(April 30, 2012)
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
BlueFlash Communications, Inc. (the "Company") is a development stage company,
incorporated in the State of Florida on January 11, 2011. BlueFlash
communications, Inc. intends to create, deliver and track all aspects of
geo-location based mobile device coupon campaigns that could have a material
impact on the young mobile advertising space. The Company's management has
chosen January 31st for its fiscal year end.
Through April 30, 2012 the Company was in the development stage and has not
carried on any significant operations and has generated minimal revenues. The
Company has incurred losses since inception aggregating $19,358. The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. These matters, among others, raise substantial
doubt about the ability of the Company to continue as a going concern. These
financial statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary should the
Company be unable to continue as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
Basis of Presentation
---------------------
The accompanying financial statements have been prepared in accordance with
United States generally accepted accounting principles (US GAAP) for interim
financial information and in accordance with professional standards promulgated
by the Public Company Accounting Oversight Board (PCAOB). They reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the nine months
ended April 30, 2012, respectively along with the period January 11, 2011 (date
of inception) to April 30, 2012.
Accounting Basis
----------------
The Company is currently a development stage enterprise reporting under the
provisions of Accounting Standards Codification ("ASC") 915 "Development Stage
Entities", which was previously Statement of Financial Accounting Standards
("SFAS") No. 7.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
for interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, the financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and such
statements are of a normal recurring nature. These financial statements should
be read in conjunction with the financial statements for the year ended
September 30, 2011 and notes thereto and other pertinent information contained
in our Form S-1/A the Company has filed with the Securities and Exchange
Commission.
The results of operations for the three-month period ending April 30, 2012 are
not necessarily indicative of the results for the full fiscal year ending
January 31, 2012.
8
BlueFlash Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(April 30, 2012)
Cash and Cash Equivalents
-------------------------
For the purpose of the financial statements cash equivalents include all highly
liquid investments with maturity of three months or less.
Fair Value of Financial Instruments
-----------------------------------
The fair value of cash and cash equivalents and accounts payable approximates
the carrying amount of these financial instruments due to their short maturity.
Earnings (Loss) per Share
-------------------------
The basic earnings (loss) per share are calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares outstanding during the year. The diluted earnings (loss) per share are
calculated by dividing the Company's net income (loss) available to common
Shareholders by the diluted weighted average number of shares outstanding during
the year. The diluted weighted average number of shares outstanding is the basic
weighted number of shares adjusted as of the first of the year for any
potentially dilutive debt or equity. There are no diluted shares outstanding for
any periods reported.
Dividends
---------
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown, and none are contemplated in
the near future.
Income Taxes
------------
The Company adopted FASB ASC 740, Income Taxes, at its inception deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets, including tax loss and credit carryforwards, and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Deferred income tax expense represents the change during the period in the
deferred tax assets and deferred tax liabilities. The components of the deferred
tax assets and liabilities are individually classified as current and
non-current based on their characteristics. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized. No
deferred tax assets or liabilities were recognized as of April 30, 2012.
Advertising
-----------
The Company will expense advertising as incurred. The advertising since
inception has been $0.00.
9
BlueFlash Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(April 30, 2012)
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue and Cost Recognition
----------------------------
The Company has no current source of revenue; therefore the Company has not yet
adopted any policy regarding the recognition of revenue or cost.
Property
--------
The company does not own any real estate or other properties. The company's
office is located 1801 26th Street, Sacramento, CA 95816. Our contact number is
916-396-3361. The business office is located at the home of Ms. Marissa Watson,
the CEO of the company at no charge.
Recently Issued 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.
NOTE 3. INCOME TAXES
The Company provides for income taxes under ASC Topic 740 which requires the use
of an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect currently.
ASC Topic 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In the
Company's opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset.
The Company utilizes the asset and liability method for financial reporting of
income taxes. Deferred tax assets and liabilities are determined based on
temporary differences between financial reporting and the tax basis of assets
and liabilities, and are measured by applying enacted rates and laws to taxable
years in which such differences are expected to be recovered or settled. Any
changes in tax rates or laws are recognized in the period when such changes are
enacted.
10
BlueFlash Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(April 30, 2012)
As of April 30, 2012, the Company has $7,550 in gross deferred tax assets
resulting from net operating loss carry-forwards. A valuation allowance has been
recorded to fully offset these deferred tax assets because the Company's
management believes future realization of the related income tax benefits is
uncertain. Accordingly, the net provision for income taxes is zero for the
period January 11, 2011 (inception) to April 30, 2012. As of April 30, 2012, the
Company has federal net operating loss carry forwards of approximately $19,358
available to offset future taxable income through 2031. The difference between
the tax provision at the statutory federal income tax rate on April 30, 2012 and
the tax provision attributable to loss before income taxes is as follows:
For the period
January 11, 2011
(inception) through
April 30, 2012
-------------------
Statutory federal income taxes ........ 34.0%
State taxes, net of federal benefits .. 5.0%
Valuation allowance ................... -39.0%
-------------------
Income tax rate ....................... -
===================
The Company has not been required to file income tax returns since the date of
inception.
As of April 30, 2012, the Company had estimated net loss carry forwards of
approximately $19,358 which expires through its tax year ending 2030.
Utilization of these net operating loss carry forwards may be limited in
accordance with IRCD Section 382 in the event of certain shifts in ownership.
NOTE 4. STOCKHOLDERS' EQUITY
Preferred Stock
---------------
As of April 30, 2012, the Company did not have any preferred stock authorized,
issued nor outstanding.
Common Stock
------------
On January 11, 2011, the Company issued 9,000,000 of its $0.0001 par value
common stock for $8,000 cash and $1,000 in a stock subscription receivable to
the founder of the Company. The issuance of the shares was made to the sole
officer and director of the Company and an individual who is a sophisticated and
accredited investor, therefore, the issuance was exempt from registration of the
Securities Act of 1933 by reason of Section 4 (2) of that Act.
On June 24, 2011, the Company sold 1,200,000 shares of common stock, $0.0001 par
value for $12,000. These shares were registered with the SEC on Form S-1 which
was declared effective by the SEC on May 13, 2011.
As of April 30, 2012, there are 300,000,000 Common Shares at $0.0001 par value,
authorized with 10,200,000 issued and outstanding.
11
BlueFlash Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(April 30, 2012)
NOTE 5. RELATED PARTY TRANSACTIONS
As of April 30, 2012, the sole officer and sole director of the Company is
involved in other business activities and may, in the future, become involved in
other business opportunities that become available. She may face a conflict in
selecting between the Company and other business interests. The Company has not
formulated a policy for the resolution of such conflicts.
NOTE 6. GOING CONCERN
As of April 30, 2012, the accompanying financial statements have been presented
on the basis that it is a going concern in the development stage, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business.
For the period January 11, 2011 (date of inception) through April 30, 2012 the
Company has had a net loss of $19,358 consisting of SEC audit and review fees,
California state taxes, legal and incorporation fees for the Company to initiate
its SEC reporting requirements.
As of April 30, 2012, the Company has not yet emerged from the development
stage. In view of these matters, recoverability of any asset amounts shown in
the accompanying audited financial statements is dependent upon the Company's
ability to begin operations and to achieve a level of profitability. Since
inception, the Company has financed its activities principally from the sale of
equity securities. The Company intends on financing its future development
activities and its working capital needs largely from loans and the sale of
public equity securities with some additional funding from other traditional
financing sources, including term notes, until such time that funds provided by
operations are sufficient to fund working capital requirements.
NOTE 7. CONCENTRATION OF RISKS
Cash Balances
-------------
The Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). All other deposit accounts at FDIC-insured
institutions were insured up to at least $250,000 per depositor until December
31, 2009. On January 1, 2010, FDIC deposit insurance for all deposit accounts,
except for certain retirement accounts, returned to $100,000 per depositor. The
Company had no deposits in excess of insured amounts as of April 30, 2012.
NOTE 8. SUBSEQUENT EVENTS
On May 15, 2012, Mr. Brad German resigned as CEO, President, and director of the
Company to pursue other business activities. On the same date, Ms. Marissa
Watson became the CEO, President and Director of the Company.
We have evaluated events and transactions that occurred subsequent to April 30,
2012 through May 21, 2012 the date the financial statements were available to be
issued, for potential recognition or disclosure in the accompanying financial
statements. Other than the disclosures above, we did not identify any events or
transactions that should be recognized or disclosed in the accompanying
financial statements.
12
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Overview
BlueFlash Communications, Inc. is a development stage company and was
incorporated in Florida on January 11, 2011, BlueFlash intends to develop
software and systems to create, deliver and track all aspects of geo-location
based mobile device coupon campaigns that could have a material impact on the
young mobile advertising space.
Results of Operations
---------------------
The following discussion should be read in conjunction with the condensed
financial statements and segment data and in conjunction with the Company's S-1
and amended S-1/A's. Results or interim periods may not be indicative of results
for the full year.
In the first quarter of fiscal year 2013, the Company finished up the business
and financial plan. In addition, the Company has started designing a software
prototype for demo purposes.
Results of Operations
The Company did not generate any revenue during the three months ended April 30,
2012.
Total expenses for the three (3) months ending April 30, 2012 were $4,103
resulting in an operating loss for the period of $4,103. Basic net loss per
share amounting to $.001 for the three (3) months ending April 30, 2012.
General and Administrative expenses consisted primarily of SEC reporting, audit
and filing fees for the three (3) months ending April 30, 2012 and were $4,103.
Total expenses for the three (3) months ended April 30, 2012 were $4,103
resulting in an operating loss for the period of $4,103 as compared to total
expenses of $2,807 for the three (3) months ended April 30, 2011. The increase
in expenses was due to audit, filing, and sec expenses.
Liquidity and Capital Resources
-------------------------------
At April 30, 2012 we had working capital of $1,642 consisting of cash on hand
and accounts receivables of $5,242 and liabilities of $3,600 as compared to
working capital of $5,745 at January 31, 2012, consisting of cash.
Net cash used in operating activities for the three months ended April 30, 2012
was $5,703 as compared to $5,880 for the three months ended April 30, 2011.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to a smaller reporting company.
13
ITEM 4. CONTROLS AND PROCEDURES
Management's Report On Internal Control Over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
company;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company;
and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of April 30, 2012 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
14
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of April 30, 2012.
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
Management's Remediation Initiatives
------------------------------------
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2012. Additionally, we plan to test our updated
controls and remediate our deficiencies by December 31, 2012.
Changes in internal controls over financial reporting
-----------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Not applicable to a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive
officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and
accounting officer
32.1 Section 1350 Certification of principal executive officer and principal
financial and accounting officer
101* 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."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BlueFlash Communications, Inc.
BY: /s/ Marissa Watson
--------------
Marissa Watson
President, Secretary, Treasurer,
Principal Executive Officer,
Principal Financial and Accounting
Officer and Sole Director
Dated: June 5, 2012
1