The Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At June 30, 2016, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.

ADVERTISING COSTS

The Company's policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during the three month and six month periods ended June 30, 2016 and 2015.

EARNINGS PER SHARE

The Company computes loss per share in accordance with ASC 105, "Earnings per Share" which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

The Company had no potentially dilutive debt or equity instruments issued and outstanding during the three and six month periods ended June 30, 2016 and December 31, 2015.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of its operations.

The Company's continuation as a going concern is dependent on its ability to obtain additional financing to fund operations, implement its business model, and ultimately, to attain profitable operations. The Company will need to secure additional funds through various means, including an acquisition, equity and debt financing or any similar financing. There can be no assurance that the Company will be able to obtain additional debt or equity financing, if and when needed, on terms acceptable to the Company, or at all. Any additional equity or debt financing may involve substantial dilution to the Company's stockholders, restrictive covenants or high interest costs. The Company's long-term liquidity also depends upon its ability to generate revenues and achieve profitability.

 

The accompanying financial statements do not include any adjustments relating 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.

 

An officer/shareholder of the Company has advanced monies to pay expenses on behalf of the Company. The balance due the officer/shareholder was $-0- and $25,953 respectively for June 30, 2016 and December 31, 2015. The loan does not accrue interest and is due upon demand.

During the period ended June 30, 2016, monies was paid to various vendors by a related party amounting to $1,045 with deferred interest of $955 in exchange for notes payable of $2,000 accruing interest at 2% per annum. Interest expense for the three month and six month periods June 30, 2016 and 2015 was $-0- and $1,016 and $ 4,095 respectively. Accrued interest at June 30, 2016 and December 31, 2015 was $-0- and $139 respectively.

On or about April 11, 2016, Gary Okizaki, the Chief Executive Officer, Director and majority shareholder of the Company, and Monroe Coleman, Vice-President, Secretary and Director of the Company, sold an aggregate of 6,975,000 shares of restricted common stock of the Company to Robert Lee. Concurrently, Mr. Lee agreed to purchase the 1,350,000 shares held by Brian Yamauchi, the Vice-President, Treasurer and Director of the Company, and to cancel such shares.  These transactions have not been reflected the books and records the Company as the date of this report, but will be consummated and so reflected on or before May 31, 2016.  Following  the consummation of the transactions described above, Mssrs. Okizaki, Yamauchi and Coleman will have completely divested of their ownership of common stock of the Company.  Each of Mssrs. Okizaki, and Yamauchi remain, however, a director and officer of the Company.  Mr. Coleman resigned from the board effective March 24, 2016.

As a result of the transaction described above, Mr. Lee will, upon consummation, acquire approximately 78% of the total votes entitled to be cast at any meeting of shareholders, giving him voting control of the Company.  Mr. Lee obtained the funds for the purchase of the Company's common stock in the transaction from its available cash on hand.

Also on August 3, 2016, the holders of options issued by Pura Naturals, Inc. and adopted by the Company, agreed to exercise such options.  As a result, James Kordenbrock and Robert Doherty were issued 313,350 and 156,675 shares, respectively.

The following discussion should be read in conjunction with our financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

Overview and History

Effective July 18, 2016 (the "Closing Date"), the Company entered into that certain Share Exchange Agreement (the "Share Exchange Agreement") by and among the Company, Pura Naturals, Inc., a Delaware corporation ("PURA") and certain shareholders of PURA (the "PURA Shareholders").  Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding common and preferred stock of PURA held by the PURA Shareholders for shares of common stock of the Company on approximately a 1:4.2 basis, (after giving effect to certain share cancellations).  At the Closing Date, Robert Lee, the holder of 8,289,000 shares of common stock, agreed to cancelation of such shares.  Other than Robert Lee, shareholders of Company common stock held approximately 1,926,000 shares.  Also on the Closing Date, the Company issued approximately 6,267,000 shares of common stock to the PURA shareholders.   In addition, shares issuable under outstanding options of PURA will be exercisable into shares of common stock of the Company, pursuant to the terms of such instruments.  The shares of PURA common stock issuable upon exercise of options will be exchanged for approximately 470,000 Shares of the Company's common stock, par value $0.001 per share.  As of the date of the filing of this Quartely Report on Form 10-Q, the holders of the majority shares of common of PURA have exchanged their shares into a majority of the shares of the issued and outstanding shares of the Company's common stock.

We have never been subject to any bankruptcy proceeding.

 

Our executive offices are located at 23101 Lake Center Drive, Suite 100, Lake Forest, CA 92630, telephone (855) 326-8537.

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Results of Operations

Comparison of Results of Operations for the three months ended June 30, 2016 and 2015

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the three month period ended June 30, 2016.

 

Critical Accounting Estimates

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that 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.

 

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Share Exchange Agreement

Effective July 18, 2016 (the "Closing Date"), Yummy Flies, Inc. (the "Company") entered into that certain Share Exchange Agreement (the "Share Exchange Agreement") by and among the Company, Pura Naturals, Inc., a Delaware corporation ("PURA") and certain shareholders of PURA (the "PURA Shareholders").  Pursuant to the Share Exchange Agreement, the Company agreed to exchange the outstanding common and preferred stock of PURA held by the PURA Shareholders for shares of common stock of the Company on approximately a 1:4.2 basis, (after giving effect to certain share cancellations).  At the Closing Date, Robert Lee, the holder of 8,289,000 shares of common stock, agreed to cancelation of such shares.  Other than Robert Lee, shareholders of Company common stock held approximately 1,926,000 shares.  Also on the Closing Date, the Company issued approximately 6,267,000 shares of common stock to the PURA shareholders.   Such shares were issued and canceled, as the case may be, on August __, 2016.  In addition, shares issuable under outstanding options of PURA will be exercisable into shares of common stock of the Company, pursuant to the terms of such instruments.  The shares of PURA common stock issuable upon exercise of options will be exchanged for approximately 470,000 Shares of the Company's common stock, par value $0.001 per share.  As of the date of the filing of this Quarterly Report on Form 10-Q, the holders of the majority shares of common of PURA have exchanged their shares into a majority of the shares of the issued and outstanding shares of the Company's common stock.  As a result of the Share Exchange Agreement and the other transactions contemplated thereunder, PURA is now a majority owned subsidiary of the Company.

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ITEM 5.  OTHER INFORMATION (Continued)

The above description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Share Exchange Agreement, which is attached as Exhibit 2.1 to the Current Report on Form 8-K filed July 18, 2016.

Subscription Agreement

On June 2, 2016, PURA entered into that certain subscriptions agreement (the "Subscription Agreement") with an accredited investor for the issuance of convertible promissory notes (the "Notes") in the aggregate principal amount of $400,000, which are convertible into shares of common stock of the Company at $0.75 per share.  The Notes were converted into 144,054 shares of common stock of the Company on or about August 3, 2016.

Also on August 3, 2016, the holders of options issued by Pura Naturals, Inc. and adopted by the Company, agreed to exercise such options.  As a result, James Kordenbrock and Robert Doherty were issued 313,350 and 156,675 shares, respectively.