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EXCEL - IDEA: XBRL DOCUMENT - Business Marketing Services Inc | Financial_Report.xls |
EX-31.1 - CERTIFICATION - Business Marketing Services Inc | f10q0614ex31i_businessmark.htm |
EX-32.1 - CERTIFICATION - Business Marketing Services Inc | f10q0614ex32i_businessmark.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2014
☐ 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: 333-152017
BUSINESS MARKETING SERVICES, INC.
(Exact name of Registrant as specified in its charter)
Delaware | 80-0154787 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) |
350 Madison Avenue, 8 th Floor
New York, NY 10017
(Address of principal executive offices)
(646) 416-6802
(Registrant’s telephone number, including area code)
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 ☒ 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 during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files. Yes ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of June 30, 2014, there were 19,500,000 shares of the registrant’s common stock outstanding.
Business Marketing Services, Inc.
June 30, 2014 and 2013
Index to the Consolidated Financial Statements
Contents | Page(s) | |
Consolidated Balance Sheets at June 30, 2014 (Unaudited) and December 31, 2013 | F-2 | |
Consolidated Statements of Operations for the Six Months and Three Months Ended June 30, 2014 and 2013 (Unaudited) | F-3 | |
Consolidated Statement of Equity (Deficit) for the Reporting Period Ended June 30, 2014 (Unaudited) | F-4 | |
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (Unaudited) | F-5 | |
Notes to the Consolidated Financial Statements (Unaudited) | F-6 |
F-1 |
Business Marketing Services, Inc.
Consolidated Balance Sheets
June
30, 2014 | December 31, 2013 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 36 | $ | - | ||||
Receivable from former stockholder | 1,727 | 14,502 | ||||||
Total Current Assets | 1,763 | 14,502 | ||||||
TOTAL ASSETS | $ | 1,763 | $ | 14,502 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
CURRENT LIABILITIES | ||||||||
Accrued expenses | $ | 14,268 | $ | 13,308 | ||||
Bank overdraft | - | 61 | ||||||
Total Current Liabilities | 14,268 | 13,369 | ||||||
TOTAL LIABILITIES | 14,268 | 13,369 | ||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Preferred stock par value $0.0001: 50,000,000 shares authorized; none issued or outstanding | - | - | ||||||
Common stock par value $0.0001: 200,000,000 shares authorized; 19,500,000 shares issued and outstanding | 1,950 | 1,950 | ||||||
Additional paid-In capital | 170,523 | 170,523 | ||||||
Accumulated deficit | (184,978 | ) | (171,340 | ) | ||||
Total Stockholders' Equity (Deficit) | (12,505 | ) | 1,133 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 1,763 | $ | 14,502 |
See accompanying notes to the consolidated financial statements
F-2 |
Business Marketing Services, Inc. | ||||||||||||||||||
Consolidated Statements of Operations |
For the Six Months | For the Three Months | For the Six Months | For the Three Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
June 30, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2013 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Revenue | $ | - | $ | - | $ | 51,273 | $ | 25,512 | ||||||||
Operating Expenses: | ||||||||||||||||
Professional fees | 13,526 | 7,127 | 25,128 | 19,458 | ||||||||||||
General and administrative expenses | 112 | 90 | 1,153 | 429 | ||||||||||||
Total Operating Expenses | 13,638 | 7,217 | 26,281 | 19,887 | ||||||||||||
Income (loss) before income tax and non-controlling interest | (13,638 | ) | (7,217 | ) | 24,992 | 5,625 | ||||||||||
Income tax provision | - | - | - | - | ||||||||||||
Income (loss) from continuing operations | (13,638 | ) | (7,217 | ) | 24,992 | 5,625 | ||||||||||
Discountinued operations | ||||||||||||||||
Income from operation of discontinued operation, net of tax | - | - | 25,320 | 17,069 | ||||||||||||
Income from discontinued operations, net of tax | - | - | 25,320 | 17,069 | ||||||||||||
Net income (loss) | ||||||||||||||||
Net income (loss) before non-controlling interest | (13,638 | ) | (7,217 | ) | 50,312 | 22,694 | ||||||||||
Net income (loss) attributable to non-controlling interest | - | - | 10,128 | 6,828 | ||||||||||||
Net income (loss) attributable to BMSV stockholders | $ | (13,638 | ) | $ | (7,217 | ) | $ | 40,184 | $ | 15,866 | ||||||
Earnings Per Common Share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | $ | 0.00 | ||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||
- basic and diluted | 19,500,000 | 19,500,000 | 19,500,000 | 19,500,000 |
See accompanying notes to the consolidated financial statements
F-3 |
Business Marketing Services, Inc. | |||||||||||||||||||||
Consolidated Statement of Equity (Deficit) | |||||||||||||||||||||
For the Reporting Period ended June 30, 2014 | |||||||||||||||||||||
(Unaudited) |
Accumulated Other | ||||||||||||||||||||||||||||||||
Comprehensive | ||||||||||||||||||||||||||||||||
Income (Loss) | ||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in | Accumulated | Foreign Currency Translation | Total BMSV Stockholders' Equity | Non-controlling | Total Equity | ||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | gain (loss) | (Deficit) | Interest | (Deficit) | |||||||||||||||||||||||||
Balance, December 31, 2012 | 19,500,000 | 1,950 | 170,523 | (200,681 | ) | (710 | ) | (28,918 | ) | 13,843 | (15,075 | ) | ||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||
Net Income | - | - | - | 29,341 | - | 29,341 | 10,128 | 39,469 | ||||||||||||||||||||||||
Foreign currency translation gain (loss) | - | - | - | - | 207 | 207 | 139 | 346 | ||||||||||||||||||||||||
Total comprehensive income | - | - | - | - | - | 29,548 | 10,267 | 39,815 | ||||||||||||||||||||||||
Disposal of discontinued operation | - | - | - | - | 503 | 503 | (24,110 | ) | (23,607 | ) | ||||||||||||||||||||||
Balance, December 31, 2013 | 19,500,000 | 1,950 | 170,523 | (171,340 | ) | - | 1,133 | - | 1,133 | |||||||||||||||||||||||
Net Loss | - | - | - | (13,638 | ) | - | (13,638 | ) | - | (13,638 | ) | |||||||||||||||||||||
Balance, June 30, 2014 | 19,500,000 | $ | 1,950 | $ | 170,523 | $ | (184,978 | ) | $ | - | $ | (12,505 | ) | $ | - | $ | (12,505 | ) |
See accompanying notes to the consolidated financial statements
F-4 |
Business Marketing Services, Inc. | ||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||
For the Six Months | For the Six Months | |||||||||||||||
Ended | Ended | |||||||||||||||
June 30, 2014 | June 30, 2013 | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Cash Flows from Operating Activities | ||||||||||||||||
Net income (loss) before non-controlling interest | $ | (13,638 | ) | $ | 50,312 | |||||||||||
Adjustments to reconcile net income (loss) before non-controlling interest to net cash used in operating activities | ||||||||||||||||
Amortization expense | - | 515 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Prepayments and other current assets | - | (644 | ) | |||||||||||||
Accrued expenses | 960 | - | ||||||||||||||
Accounts payable | - | (61,324 | ) | |||||||||||||
Net cash used in operating activities | (12,678 | ) | (11,141 | ) | ||||||||||||
Cash Flows from Investing Activities | ||||||||||||||||
Collection of receivable from former stockholder | 12,775 | - | ||||||||||||||
Net cash flows provided by investing activities | 12,775 | - | ||||||||||||||
Cash Flows from Financing Activities | ||||||||||||||||
Bank overdraft | (61 | ) | - | |||||||||||||
Proceeds from (repayments to) notes payable - stockholder | - | (34,651 | ) | |||||||||||||
Net cash flows used in financing activities | (61 | ) | (34,651 | ) | ||||||||||||
Effect of Foreign Exchange Rate Change on Cash | - | 346 | ||||||||||||||
Net Change in Cash | 36 | (45,446 | ) | |||||||||||||
Cash at Beginning of Reporting Period | - | 110,876 | ||||||||||||||
Cash at Beginning of Reporting Period | $ | 36 | $ | 65,430 | ||||||||||||
Supplemental Disclosure of Cash Flows Information: | ||||||||||||||||
Interest paid | $ | - | $ | - | ||||||||||||
Income tax paid | $ | - | $ | - |
See accompanying notes to the consolidated financial statements
F-5 |
Business Marketing Services, Inc.
June 30, 2014 and 2013
Notes to the Consolidated Financial Statements
(Unaudited)
Note 1 – Organization and Operations
Business Marketing Services, Inc.
Business Marketing Services, Inc., (“BMSV” or the “Company”), was incorporated under the laws of the State of Delaware on December 7, 2007.
The Company initially intended to publish and distribute 13 month calendars and wall planners for each industry group that the Company targeted and distribute them to members of the targeted industry or profession free of charge. The Company’s initial plan was to generate revenue solely through the sale of advertising space on the wall planners. These wall planners would have been produced upon the sale of all the available advertising space.
Change of Control
On January 19, 2010, Hans Pandeya acquired the majority of the issued and outstanding common stock of the Company, from Doug Black, in accordance with a common stock purchase agreement (the “Stock Purchase Agreement”) between Hans Pandeya, Doug Black and the Company. On the Closing Date, pursuant to the terms of the Stock Purchase Agreement, Hans Pandeya acquired fifteen million (15,000,000) shares of the Company’s issued and outstanding common stock representing approximately 78% of the Company’s then issued and outstanding common stock, for a total purchase price of Three Hundred Twenty-Five Thousand dollars ($325,000).
On March 12, 2010, the Company acquired the source code and other software assets of gTrade, a company organized under the laws of Australia (“gTrade”) from Emil Koutanov, Guy Havenstein, and Tony Fle-Danijelovich (the “Sellers”) pursuant to the Asset Transfer Agreement (the “Asset Transfer Agreement”) between the Company and the Sellers. The Company intends to use the acquired source code to develop new marketing services for the Company.
Formation of Majority-Owned Subsidiary, Consulting Services to the Subsidiary and Call Options to Acquire Shares
Formation of Majority-Owned Subsidiary
On February 3, 2011, the Company entered into a Shareholders, Company Formation and Capital Increase Agreement (the “Company Formation Agreement”) between Smartlaunch A/S (“SL”), Rainmaking Holding 1 ApS (“RM”), Perfect Best International Ltd (“PBI”), and Hans Pandeya and formed Adcore, Aps (“Adcore”) under the laws of the Kingdom of Denmark. Pursuant to the terms of the Company Formation Agreement, the Company, jointly with other parties, formed Adcore under the laws of Denmark as a jointly owned company with a nominal share capital of Denmark Krone (“DKK”) 81,000, of which 55.56% ownership belongs to Business Marketing Services, Inc. Initial equity ownership of Adcore upon formation was as follows:
Shareholder | Nominal Shareholding | Percentage | |||||
RM | 18,000 | 22.22% | |||||
PBI | 18,000 | 22.22% | |||||
BMSV | 45,000 | 55.56% | |||||
Total: | 81,000 | 100.00% |
Issuance of 9,000 New Shares of Adcore to Smartlaunch A/S for Software Contributed
Immediately after formation of Adore, Smartlaunch A/S received 9,000 new shares in Adcore for contributed software recorded at its historical value on the books of Smartlaunch of $1,668. Following SL’s subscription for shares, the ownership was as follows:
Shareholder | Nominal Shareholding | Percentage | |||||
RM | 18,000 | 20% | |||||
SL | 9,000 | 10% | |||||
PBI | 18,000 | 20% | |||||
BMSV | 45,000 | 50% | |||||
Total: | 90,000 | 100% |
F-6 |
BMSV’s Acquisition of 9,000 Shares of Adcore from Smartlaunch A/S, an Entity under Common Control with the Company
On February 25, 2011, BMSV bought 9,000 shares of Adcore from Smartlaunch Systems A/S for SEK 654,648 (equivalent to $101,816 based on the spot foreign currency exchange rate). On the Closing Date, under the terms and conditions of the STA, the Company purchased and Smartlaunch sold all of its rights, title and interest in shares of the common stock of Adcore Aps, a Danish corporation with offices at Kristen Bernikows Gade 6, 4. 1105 Copenhagen K, Denmark; company number: 32320465. The shares acquired by the Company equal 10% of the issued and outstanding common stock of Adcore Aps.
Consulting Services to the Majority-Owned Subsidiary
Pursuant to the terms of the Company Formation Agreement, BMSV assisted Adcore in developing its business in the U.S. and India and be responsible for innovation and product development of Adcore; whereby, Adcore needs to pay 50% of its net revenues (defined as total revenue minus payment, transaction, and reseller fees, charge backs, exchange rate adjustments and value added tax (“VAT”)) to BMSV in return on a quarterly basis. All balances and transactions resulted from this arrangement have been eliminated due to its inter-company nature.
Call Options to Acquire Certain Shares from Non-controlling Interest Holder
Pursuant to the terms of the Company Formation Agreement, BMSV was also granted a call option to buy 9,000 shares from each of RM and PBI corresponding to 50% of RM’s and PBI’s ownerships at a nominal price if the following milestones are not achieved:
- | “SL Free” software completed by June 1, 2011. The share call option based in this milestone must be executed before June 20, 2011. |
- | Turnover 2012 minimum DKK five (5) million. The share call option based in this milestone must be executed before April 1, 2013. |
The milestone of ““SL Free” completed by June 1, 2011” was achieved and the June 1, 2011 milestone call option to acquire certain shares from non-controlling interest was nullified.
The milestone of 2012 turnover minimum DKK five (5) million was not achieved, the Company didn’t exercise the call option and the option right was lapsed.
Sale of Majority-Owned Subsidiary to Former President, CEO and Stockholder
On July 1, 2013, the Company entered into a stock purchase agreement (the “Agreement”) with its former President, CEO and majority shareholder, Hans Pandeya (“Hans”) whereby BMSV sold 54,000 shares of Adcore’s common stock representing its 60% interest (the Company’s total interest) to Hans Pandeya for $16,517 net of advances from Hans (the “Purchase Price”).
The consolidated financial statements have been presented to give retroactive effect to this discontinuance.
Note 2 - Significant and Critical Accounting Policies and Practices
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation - Unaudited Interim Financial Information
The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2014.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).
F-7 |
Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:
(i) | Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. |
(ii) | Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors. |
(iii) | Revenue recognition: The Company assumes all of the revenue recognition criteria are met including reasonable assurance of collectability when recognizing revenue. The Company evaluates the key factors and assumptions used to determine the collectability of revenue being recognized. |
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole 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.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Principles of Consolidation
The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.
The Company's consolidated subsidiaries and/or entities are as follows:
Name of consolidated subsidiary or entity | State or other jurisdiction of incorporation or organization | Date of incorporation or formation (date of acquisition, if applicable) [date of divestiture, if applicable] | Attributable interest | |||||
Adcore, Aps | The Kingdom of Denmark | February 3, 2011 (February 25, 2011) [July 1, 2013] | 60 | % |
The consolidated financial statements include all accounts of the Company and Adcore as of and for the interim periods then ended.
All inter-company balances and transactions have been eliminated.
Reclassification
Certain prior period amounts in the consolidated financial statements have been reclassified to conform to current period presentation. These reclassifications had no effect on reported earnings or (losses).
F-8 |
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, and accounts payable, approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
F-9 |
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Non-controlling Interest
The Company follows paragraph 810-10-65-1 of the FASB Accounting Standards Codification to report the non-controlling interest in Adcore, its majority owned subsidiary in the consolidated statements of balance sheets within the equity section, separately from the Company’s stockholders’ equity. Non-controlling interest represents the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, Adcore. Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and other comprehensive income (loss) and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.
Revenue Recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives the majority of its revenue from sales contracts with customers with revenues being generated upon the shipment of goods. Persuasive evidence of an arrangement is demonstrated via invoice, product delivery is evidenced by warehouse shipping log as well as a signed bill of lading from trucking or rail company and title transfers when the goods arrive at their destination, based on free on board (“FOB”) destination; the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue, no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.
Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in years and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
F-10 |
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended June 30, 2014 or 2013.
Earnings per Share
Earnings Per Share is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. Earnings per share ("EPS") is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.
There were no potentially dilutive common shares outstanding for the reporting period ended June 30, 2014 or 2013.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Recently Issued Accounting Pronouncements
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20.
Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation.
F-11 |
The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements.
The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years.
In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”)
This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To achieve that core principle, an entity should apply the following steps:
- Identify the contract(s) with the customer
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contract
- Recognize revenue when (or as) the entity satisfies a performance obligations
The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:
- Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)
- Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations
- Assets recognized from the costs to obtain or fulfill a contract.
ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
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The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments.
The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage.
The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.
Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915.
In June 2014, the FASB issued the FASB Accounting Standards Update No. 2014-12 “Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”).
The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The Update requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.
The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Note 3 – Going Concern
The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the consolidated financial statements, the Company had an accumulated deficit at June 30, 2014, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company is attempting to further implement its business plan and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenue and in its ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Related Party Transactions
Related Parties
Related parties with whom the Company had transactions are:
Related Parties | Relationship | |
Majken Hummel-Gumaelius | Director, President, Chief Executive Officer | |
Hans Pandeya | Majority stockholder |
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Receivable from the Sale of Adcore from Stockholder
On July 1, 2013, the Company entered into a stock purchase agreement (the “Agreement”) with its former President, CEO and majority shareholder, Hans Pandeya (“Hans”) whereby BMSV sold 54,000 shares of Adcore’s common stock representing its 60% interest (the Company’s total interest) to Hans Pandeya for $16,517 net of advances from Hans (the “Purchase Price”). The remaining balance of receivable from the sale of Adcore from stockholder was $14,502, which was partially received on March 6, 2014 and fully paid on April 15, 2014.
Free Office Space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Note 5 - Stockholders’ Equity (Deficit)
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Two Hundred Fifty Million (250,000,000) shares of which Fifty Million (50,000,000) shares shall be Preferred Stock, par value $.0001 per share, and Two Hundred Million (200,000,000) shares shall be Common Stock, par value $.0001 per share.
Note 6 – Subsequent Events
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent event(s) to be disclosed.
F-14 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “will” and words and terms of similar substance used in connection with any discussion of future events, operating or financial performance, financing sources, product development, capital requirements, market growth and the like, identify forward-looking statements. Forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors which could cause the actual results to differ materially from the forward-looking statement. These forward-looking statements include, among others:
● | projections of revenues and other financial items; |
● | statements of strategies and objectives for future operations; |
● | statements concerning proposed applications or services; |
● | statements regarding future economic conditions, performance or business prospects; |
● | statements regarding competitors or competitive actions; and |
● | statements of assumptions underlying any of the foregoing. |
All forward-looking statements are present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks related to the Company’s business discussed under “Risk Factors” of this Quarterly Report on Form 10-Q, among others, could cause actual results to differ materially from those described in the forward-looking statements. Such risks include, among others: the competitive environment; unexpected technical and marketing difficulties inherent in development efforts; the potential need for changes in our long-term strategy in response to future developments; as well as potential changes in government regulations and laws, both of which could adversely affect the economics of the products we plan to offer; and rapid changes in the technology industry.
The Company makes no representation as to whether any projected or estimated information or results contained in any forward-looking statements will be obtained or achieved. Shareholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The Company is under no obligation, and it expressly disclaims any obligation, to update or alter any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.
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Overview
Business Marketing Services, Inc.’s (“BMSV” or the “Company”) is a development stage company.
We believe we can create new revenue streams in the entertainment industry with methods that improve enforcement of copyright.
We intend to obtain licensing of digital content; and enter into partnerships to access state-of-the-art technology for storage and delivery of digital content to consumers. We intend to make strategic acquisitions to realize our plans.
We might alter our plans if we do not succeed in raising funds or if we do not succeed in obtaining licensing agreements.
Recent Developments and Changes to Business Plan
On January 7, 2013, Mrs Majken Hummel-Gumaelius was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director of the Company. Mrs. Hummel-Gumaelius has not been appointed to any committees of the Board, as the Board does not presently have any committees.
Results of Operations
Revenues
The Company generated no revenues for the six months ended June 30, 2014 as compared to $51,273 for the six months ended June 30, 2013. For the three months ended June 30, 2014 the Company generated no revenues as compared to $25,512 for the three months ended June 30, 2013. The decrease was attributable to divestment of the Company's shares in Adcore Aps.
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Professional Fees
The Company incurred $13,526 and $7,127 in professional fees for the six and three months ended June 30, 2014, as compared to $25,128 and 19,458 for the six and three months ended June 30, 2013.
General and Administrative Expenses
The company incurred general and administrative expenses of $112 and 90 for the six and three months ended June 30, 2013 as compared to $1,153 and 429 for the six and three months ended June 30, 2013.
Discontinued Operations
Discontinued operations generated no income for the six and three months ended June 30, 2014 as compared to $25,320 and 17,069 for the six and three months ended June 30, 2013.
Liquidity and Capital Resources
As of June 30, 2014 we had $36 in cash. While we are reviewing our operations and business plan to determine the most effective way to produce revenues, our cash position cannot support our daily operations. Any shortfall is currently funded by our majority shareholder, Hans Pandeya. Management intends to raise additional funds by way of a public or private offering. Management believes that our business plan will generate revenues and provide the opportunity for us to continue as a going concern. While we believe in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement the business plan and generate revenues.
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
The following table summarizes the Company’s Consolidated Statement of Cash Flows:
Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Net cash provided (used) by operating activities | ||||||||
Operating Activities | (12,678 | ) | 13,896 | |||||
Investing Activities | - | - | ||||||
Financing Activities | 12,71 4 | (34,651 | ) |
Critical Accounting Policies and Estimates
Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements contained in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that management 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. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:
Cash and Cash Equivalents
The Company considers cash on hand and amounts on deposit with financial institutions which have original maturities of three months or less to be cash and cash equivalents.
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Basis of Accounting
The Company's financial statements are prepared in accordance with U.S. generally accepted accounting principles.
Income Taxes
The Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years which those temporary differences are expected to be recovered or settled. 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. At this time, the Company has set up an allowance for deferred taxes as there is no company history to indicate the usage of deferred tax assets and liabilities.
Fair Value of Financial Instruments
The Company's financial instruments may include cash and cash equivalents, short-term investments, accounts receivable, accounts payable and liabilities to banks and shareholders. The carrying amount of long-term debt to banks approximates fair value based on interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities. The carrying amounts of other financial instruments approximate their fair value because of short-term maturities.
Concentrations of Credit Risk
Financial instruments which potentially expose The Company to concentrations of credit risk consist principally of operating demand deposit accounts. The Company's policy is to place its operating demand deposit accounts with high credit quality financial institutions. At this time The Company has no deposits that are at risk.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
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-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2010. Based on this evaluation, our principal executive officer and principal financial officers have concluded that our disclosure controls and procedures are ineffective at the reasonable assurance level due to the material weaknesses described below.
In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the unaudited interim financial statements included in this quarterly report reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.
5 |
A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2010, our disclosure controls and procedures were not effective at the reasonable assurance level:
1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the unaudited interim financial statements included herein reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.
Remediation of Material Weaknesses
We have attempted to remediate the material weaknesses in our disclosure controls and procedures identified above by hiring a full-time CFO, with SEC reporting experience, in the future when funding are available and by working with our independent registered public accounting firm and refining our internal procedures. To date, we have not been able to hire a full-time CFO due to our limited funding.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
An investment in the Company’s common stock is speculative and involves a high degree of risk. You should carefully consider the risks described in the Company’s annual report Form 10-K filed on April 15, 2014 and other information in this report before purchasing any shares of the Company’s common stock. Such factors may have a significant impact on its business, operating results, liquidity and financial condition. As a result of the identified risk factors, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to the company, or that are currently considered to be immaterial, may also impact the Company’s business, operating results, liquidity and financial condition. If any such risks occur, the Company’s business, operating results, liquidity and financial condition could be materially affected in an adverse manner. In addition, the trading price of the Company’s stock, when and if a market develops for the Company’s stock, could decline.
6 |
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.
Exhibit
No. |
Description | |
3.1 (1) | Certificate of Incorporation | |
3.2 (1) | Bylaws | |
3.3 (1) | Amended Certificate of Incorporation | |
31.1 * | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer | |
32.1 * | Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 13500 |
(1) | Previously filed as an exhibit to the Company’s Registration Statement on Form S-1 dated December 7, 2007, and incorporated herein by reference. |
* | Filed herewith. |
7 |
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.
BUSINESS MARKETING SERVICES, INC. | |
Date: August 19, 2014 | /s/ Majken Hummel-Gumaelis |
Chief Executive Officer | |
(Principal Executive Officer) | |
Date: August 19, 2014 | /s/ Majken Hummel-Gumaelis |
Principal Financial and Accounting Officer |
8