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Cann American Corp. - Quarter Report: 2011 May (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
For the quarterly period ended May 31, 2011
   
[   ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
For the transition period from to __________
   
Commission File Number: 000-53712

 

Bioflamex Corporation

(Exact name of registrant as specified in its charter)

 

Nevada Pending
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 

Christiansvej 31, 2920 Charlottenlund, Denmark
(Address of principal executive offices)

 

646-233-1310
(Registrant’s telephone number)
 
_______________________________________________________________
(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 [X] 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 (§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.

 

[ ] Large accelerated filer Accelerated filer [ ] Non-accelerated filer
[X] 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

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 92,800,001 common shares as of July 18, 2011.

    
Table of Contents

 

TABLE OF CONTENTS

 

Page

 

PART I – FINANCIAL INFORMATION

 

Item 1: Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
Item 3: Quantitative and Qualitative Disclosures About Market Risk 6
Item 4: Controls and Procedures 6

 

PART II – OTHER INFORMATION

 

Item 1: Legal Proceedings 8
Item 1A: Risk Factors 8
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 8
Item 3: Defaults Upon Senior Securities 8
Item 4: Removed and Reserved 8
Item 5: Other Information 8
Item 6: Exhibits 8
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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our financial statements included in this Form 10-Q are as follows:

 

F-1 Balance Sheet as of May 31, 2011 and November 30, 2010 (unaudited);
F-2 Statements of Operations for the three months ended May 31, 2011 and 2010 and period from August 25, 2004 (Inception) to May 31, 2011 (unaudited);
F-3 Statements of Stockholders’ Deficit for period from August 25, 2004 (Inception) to May 31, 2011 (unaudited);
F-4 Statements of Cash Flows for the three months ended May 31, 2011 and 2010 and period from August 25, 2004 (Inception) to May 31, 2011 (unaudited);
F-5 Notes to Financial Statements;

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended May 31, 2011 are not necessarily indicative of the results that can be expected for the full year.

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BIOFLAMEX CORP.

(formerly known as Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

 

  May 31, 2011
  February 28, 2011
(audited)
ASSETS         
Current assets         
Cash and cash equivalents $7,746   $59 
Prepaid expenses  10,000    10,000 
Total Current Assets  17,746    10,059 
          
          
Intangible Assets – Note 3  1,191,000    1,191,000 
Total Assets $1,208,746   $1,201,059 
          
LIABILITIES AND STOCKHOLDERS’ EQUITY         
Liabilities         
Current liabilities         
Accounts payable and accrued expenses $407   $8,340 
Total Current Liabilities  407    8,340 
          
Convertible Debt ( Note 4)  60,500    60,500 
Total Liabilities  60,907    68,840 
          
Stockholders’ Equity         
Common stock, par value $0.001, 200,000,000 shares authorized, 92,800,001 shares issued and outstanding (February 28, 2011- 92,466,667 shares issued and outstanding)  9,280    9,247 
Additional paid-in capital  1,307,520    1,257,553 
Deficit accumulated during the development stage  (168,961)   (134,581)
Total Stockholders’ Equity  1,147,839    1,132,219 
          
Total Liabilities and Stockholders' Equity $1,208,746   $1,201,059 

 

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

 

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BIOFLAMEX CORP.

(formerly known as Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

 

   
Three Months Ended May 31, 2011		   
Three Months Ended May 31, 2010		  Period from August 25, 2004 (Inception)
To
May 31, 2011
         
REVENUES – Note 3 $-   $-   $               - 
               
OPERATING EXPENSES              
Bank charges  59    21    862 
Mineral property costs  —      —      16,500 
Office expenses  4,084         5,940 
Professional fees  29,188    10,720    122,450 
Transfer agent and filing fees  1,049    3,660    23,209 
TOTAL OPERATING EXPENSES  34,380    14,401    168,961 
               
               
NET LOSS $(34,380)  $(14,401)  $(168,961)
               
NET LOSS PER SHARE: BASIC AND DILUTED $(0.00)  $(0.00)     
               
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED  92,800,001    130,110,000      

 

 

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

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BIOFLAMEX CORP.

(formerly known as Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY

(unaudited)

 

                 Deficit      
                 Accumulated      
                 During the    Total 
  Common Stock    Additional    Development    Stockholders’ 
  Shares    Amount    Paid in Capital    Stage    Equity (Deficit) 
August 25, 2004 —     $—     $—     $—     $—   
                        
October 11, 2004 – Issued for cash at $.001 6,300,000    630    5,670    —      6,300 
October 25, 2004 – Issued for cash at $.01 1,050,000    105    10,395         10,500 
January 5, 2005 – Issued for cash at $.05 260,000    26    12,974    —      13,000 
                        
Net loss —      —      —      (3,729)   (3,729)
                        
Balance, February 28, 2005 7,610,000    761    29,039    (3,729)   26,071 
                        
Net loss —      —      —      (11,824)   (11,824)
                        
Balance, February 28, 2006 7,610,000    761    29,039    (15,553)   14,247 
Net loss —      —      —      (2,598)   (2,598)
                        
Balance, February 28, 2007 7,610,000    761    29,039    (18,151)   11,649 
Net loss —      —      —      (11,925)   (11,925)
                        
Balance, February 28, 2008 7,610,000    761    29,039    (30,076)   (276)
June 24, 2008 – Issued for cash at $.001 32,500,000    3,250    29,250    —      32,500 
June 24, 2008 – Issued for cash at $.0001 85,000,000    8,500    —           8,500 
October 24, 2008 – Issued for cash at $.001 5,000,000    500    4,500    —      5,000 
                        
Net loss —      —      —      (46,687)   (46,687)
                        
Balance, February 28, 2009 130,110,000    13,011    62,789    (76,763)   (963)
Net loss —      —      —      (12,441)   (12,441)
                        
Balance, February 28, 2010 130,110,000    13,011    62,789    (89,204)   (13,404)
January 25, 2011– Issued for assets at $0.0313 per share 38,000,000    3,800    1,187,200    —      1,191,000 
January 25, 2011– Returned to treasury and canceled (75,643,333)   (7,564)   7,564    —      —   
Net loss                (45,377)   (45,377)
Balance, February 28, 2011 92,466,667    9,247    1,257,553    (134,581)   1,132,219 
April 26, 2011 – Issued for cash at $.15 333,334    33    49,967    —      50,000 
Net loss                (34,380)   (34,380)
                        
Balance, May 31, 2011 92,800,001   $9,280   $1,307,520   $(168,961)  $1,147,839 

 

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

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BIOFLAMEX CORP.

(formerly known as Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

 

   
Three Months Ended May 31, 2011		   
Three Months Ended May 31, 2010		  Period from August 25, 2004 (Inception) to May 31, 2011
CASH FLOWS USED IN OPERATING ACTIVITIES              
Net loss for the period $(34,380)  $(14,402)  $(168,961)
Adjustments to reconcile net loss to net cash used in operating activities:              
Write-off of mineral properties       —      16,500 
Changes in Operating Assets and Liabilities:  —      —        
(Increase)   in prepaid expenses  —      —      (10,000)
Increase (decrease) in accounts payable & accrued expenses  (7,933)   7,880    407 
Cash flows used in operating activities  (42,313)   (6,522)   (162,054)
               
CASH FLOWS FROM INVESTING ACTIVITIES              
     Mineral property costs  —      —      (16,500)
Cash flows used in investing activities  —      —      (16,500)
               
CASH FLOWS FROM FINANCING ACTIVITIES              
Proceeds from officer’s loan  —      7,500    18,6691 
 Repayment of officer’s loan  —      —      (18,669)
Convertible loan proceeds  —      —      60,500 
Common shares issued for cash  50,000    —      125,800 
Cash flows provided by financing activities  50,000    7,500    186,300 
               
NET INCREASE (DECREASE) IN CASH  7,687    978    7,746 
Cash, beginning of the period  59    96    —   
Cash , end of the period $7,746   $1,074   $7,746 
               
SUPPLEMENTAL CASH FLOW INFORMATION:              
Interest paid $—     $—     $—  
Income taxes paid $—     $—     $—  
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES              
Shares issued for intellectual property $—          $1,191,000 

 

 

The accompanying notes are an integral part of these financial statements

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BIOFLAMEX CORP.

(formerly known as Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2011

(Unaudited) 

 

NOTE 1 – NATURE OF OPERATIONS

 

The accompanying unaudited interim financial statements have been prepared by Bioflamex Corp. ( the “Company”) pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended February 28, 2011.

 

The results of operations for the three months ended May 31, 2011 are not indicative of the results that may be expected for the full year.

 

The Company was incorporated as Deer Bay Resources Inc. in the State of Nevada, United States of America on August 25, 2004. The Company’s fiscal year end is February 28, 2011.

 

The Company’s principal business up to January 25, 2011 was the acquisition and exploration of mineral resources. On January 25, 2011, the Company entered into an Asset Purchase Agreement to acquire certain intellectual property related to a line of fire extinguishing and prevention products that are based on environment friendly and biological formulations. In consideration for the newly acquired assets, the Company issued 38,000,000 shares at $ 0.013 per share. We have not produced any revenues from the Company’s newly acquired assets or commenced significant business operations and are considered a development stage company as defined by SEC Guide 7 with reference to Financial Accounting Standards Board ( FASB) issued Accounting Standards Codification (ASC) topic 915.

 

The Company's financial statements are prepared using the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not begun to generate significant revenues, and has incurred a significant operating loss as of May 31, 2011.

 

The Company is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful. Without sufficient financing, or the achievement of profitable operations, it would be unlikely for the Company to continue as a going concern.

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BIOFLAMEX CORP.

(formerly Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2011

(Unaudited)  

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Accounting Basis

These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States 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 revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

 

Long –lived Assets

 

The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to:significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will be more likely than not be sold or disposed significantly before the end of its estimated useful life.

 

Loss Per Share

Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares.

 

Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive.

 

Dividends

The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.

 

Revenue Recognition

The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.

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BIOFLAMEX CORP.

(formerly Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2011

(Unaudited)  

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company provides for income taxes using an asset and liability approach. 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. Deferred tax assets are reduced 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. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward.

.

 

Recent Accounting Pronouncements

 

In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. (“SFAS 168” or ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company’s results of operations or financial condition. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented.

 

As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards.

 

With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.

 

Foreign currency transactions

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 820, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income.

 

NOTE 3 – INTANGIBLE ASSETS

 

On January 25, 2011, the Company entered into an Asset Purchase Agreement to acquire certain intellectual property related to a line of fire extinguishing and prevention products that are based on enviroment friendly and biological formulations. In consideration for the newly acquired assets, the Company issued 38,000,000 shares at $ 0.013 per share, totalling $ 1,190,000 to two individuals who became the entire Board of Directors and the two senior officers of the Company. The Company followed SAB Topic 5 G in determining value as the transaction was considered a non-monetary related party transaction. Value was determined based on historical costs associated with testing, patenting and trademarking the intellectual property and also supported by an independent valuation of the intellectual property. The entire purchase price was allocated to the intangible asset category of Patents and Trademarks.

F-7

BIOFLAMEX CORP.

(formerly Deer Bay Resources Inc.)

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2011

(Unaudited)  

 

 

 

NOTE 4 – CONVERTIBLE DEBT

 

The Company received $ 60,500 pursuant to a convertible debenture subscription agreement. The loan is convertible into 6,050,000 common shares of the Company at a rate of $ 0.01 of debt for each share issued. The maturity date of this convertible debenture is December 13, 2010. The debenture does not carry any rate of interest and is unsecured.

 

NOTE 5 –COMMON STOCK

 

On April 26, 2011, the Company issued 333,334 shares of common stock for cash proceeds of $ 50,000.

 

At May 31, 2011, there were no outstanding stock options or warrants.

 

NOTE 6 – INCOME TAXES

 

The provision for Federal income tax consists of the following:

 

   May 31, 2011  May 31, 2010
Refundable Federal income tax attributable to:          
Current operations  $8,600   $4,900 
Less:valuation allowance   (8,600)   (4,900)
Net provision for Federal income taxes  $—     $—   

 

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

 

   May 31, 2011
Deferred tax asset attributable to:     
Net operating loss carryover  $57,425 
Less: valuation allowance   (57,425)
Net deferred tax asset  $—   

 

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

  

NOTE 7 – SUBSEQUENT EVENTS

 

The Company has analyzed its operations subsequent to May 31, 2011 through the date the financial statements were submitted to the Securities and Exchange Commission and has determined that it does not have any additional material subsequent events to disclose in these financial statements.

  

F-8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “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. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

Company Overview

 

We are in the business of developing, producing, and marketing high performance fire extinguishing and prevention products that are based on environment friendly and biological formulations. We intend to build a leading position within the niche of environmentally friendly fire fighting and prevention solutions in the United States and internationally, both through organic growth and the acquisition of complementary companies and patents. We believe the time is right for our products. The general emphasis on environmental protection and the increased focus on health hazards in chemicals used in conventional fire fighting products paves the way for the substitution of chemical-based fire combatant products with “greener,” non-harmful products.

 

Fire extinguishers available on the market today mainly use dry chemical powder, chemical foam, CO2 or halon type of gaseous media as bases. These products in general will extinguish fires with varying efficacy, but most also contain chemical substances that harm the environment or compose a hazard to people. In addition, they can be messy and damage metals (corrosion), increasing the collateral damage. Our products offer water-based clean alternatives which are completely harmless to humans and the environment, and are non-toxic. Combined with their exceptional extinguishing characteristics, we believe these products point to the future of professional and personal fire fighting. In conventional forest fire fighting, the primary media is water which offers good extinguishing power, but has some drawbacks: it must be used in large quantities; it evaporates relatively quickly; and has a short lifespan in hot environments. Chemical AFFF foams and agents are often used to enhance the fire extinguishing or retardant capabilities, but these chemicals affect the environment and leave long-lasting toxic residue. The toxins found in foams accumulate in the food-chain and are detectable in human organs. We believe our products will have no such negative effect upon life.

 

We are in the final stages of testing and development of our proprietary range of products. Our goal is to develop 5-10 unique product formulations and application concepts covering fire fighting and fire prevention. We intend to market our products under the trademarks Bioflamex® and SAFIRE®. Our goal is to penetrate the key United States and international markets with our “clean” fire extinguishing products and fire retardants.

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We are currently preparing and submitting United States and international patent applications for our product concepts to ensure the security of our intellectual property rights and enhance the market response to our product propositions. We hope to build a solid portfolio of intellectual property within the industry that can be licensed to third parties. We are currently in the process of applying for patents on our revolutionary products and processes.

 

We are also preparing the materials necessary to complete the necessary tests, approvals and certifications in the United States and key international markets, that are the prerequisite for sales and marketing. With these approvals and certifications, we hope to gain a solid geographical presence in the United States, key markets in Europe, the Middle East and parts of Asia. We intend to work through distribution partners, agents and/or license holders, and through that presence achieve strong sales with the consumers, professional, business, industrial and government service market segments.

 

Results of operations for the three months ended May 31, 2011 and 2010, and for the period from Inception (August 25, 2004) to May 31, 2011

 

We have not earned any revenues since our inception on August 25, 2004. We do not anticipate earning revenues until such time that we have fully developed and are able to market our products.

 

We incurred operating expenses in the amount of $34,380 for the three months ended May 31, 2011, compared with operating expenses of $14,401 for the three months ended May 31, 2010. The increase is mainly attributable to professional fees and office expenses.

 

We incurred operating expenses in the amount of $168,961for the period from August 25, 2004 (Inception) to May 31, 2011. 

 

We incurred a net loss in the amount of $34,380 for the three months ended May 31, 2011, as compared with a net loss in the amount of $14,401 for the three months ended May 31, 2010. We incurred a net loss in the amount of $168,961 for the period from August 25, 2004 (Inception) to May 31, 2011. Our losses for each period are attributable to operating expenses together with a lack of any revenues.

 

Liquidity and Capital Resources

 

As of May 31, 2011, we had total current assets of $17,746. Our total current liabilities as of May 31, 2011 were $407. As a result, we had working capital of $17,339 as of May 31, 2011.

 

Operating activities used $42,313 in cash for the three months ended March 31, 2011. Our net loss of $34,380 and a decrease in accounts payable and accrued expenses of $7,933 were the contributing factors to our negative operating cash flow. Investing activities used $0 for the three months ended March 31, 2011. Financing activities for the three months ended March 31, 2011 generated $50,000 as a result of the issuance of our common stock.

 

We will require a cash injection of $2,000,000 to: begin operations, launch a full marketing and branding campaign, manufacture and deliver products and to begin and increase revenues from its products. During the current reporting period, we raised $50,000 in a private placement to an accredited investor. Notwithstanding, as of May 31, 2011, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

 

Off Balance Sheet Arrangements

 

As of May 31, 2011, there were no off balance sheet arrangements.

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Going Concern

 

Our financial statements are prepared using the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, we have not begun to generate significant revenues, and have incurred a significant operating loss as of May 31, 2011.

 

We are dependent upon our ability to secure equity and/or debt financing and there are no assurances that we will be successful. Without sufficient financing, or the achievement of profitable operations, it would be unlikely for us to continue as a going concern.

 

Critical Accounting Policies

 

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

 

Our accounting policies are set forth in Note 2 to the financial statements. Management does not believe that our accounting policies are critical enough to mention in the body of this quarterly report on Form 10-Q.

 

Recently Issued Accounting Pronouncements

 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

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We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending February 28, 2012, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended May 31, 2011 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A:Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On April 26, 2011, we issued 333,333 in a private transaction for $0.15 per share for total proceeds of $50,000.

 

The above issuances were made pursuant to Regulation S of the 1933 Act. Each purchaser represented to us that the purchaser was a Non-US Person as defined in Regulation S. We did not engage in a distribution of this offering in the United States. Each purchaser represented their intention to acquire the securities for investment only and not with a view toward distribution. All purchasers were given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. The selling stockholders named in this prospectus include all of the purchasers who purchased shares pursuant to this Regulation S offering.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Removed and Reserved

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 

Exhibit Number Description of Exhibit
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES

 

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Bioflamex Corporation
   
Date:

July 18, 2011

By: /s/ Kristian Schiorring
  Kristian Schiorring
Title: Chief Executive Officer and Director

 

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