BUSINESS MARKETING SERVICES INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) 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.
Historically, Business Marketing Services, Inc.'s ("BMSV" or the "Company") plan
of business was to publish and distribute 13-month calendars that would be
marketed to businesses of all industries to hand out to their customer's as a
promotional tool and to publish and distribute industry and profession specific
wall planners, initially implementing its business plan in Wenatchee and greater
Seattle in the State of Washington.
Recent Developments and Changes to Business Plan
On January 19, 2010, Hans Pandeya, our current CEO and director, 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 77% of the Company's issued
and outstanding common stock, for a total purchase price of Three Hundred
Twenty-Five Thousand dollars ($325,000).
On February 5, 2010, we entered into a Consulting Agreement with TAG Strategic.
The agreement calls for TAG Strategic to perform general business advisory
services. The term of the agreement is for a twelve month period. The
compensation for this agreement is in the form of monthly payments of $20,000.
On March 12, 2010, the Company acquired source code and other software assets of
gTrade, a company organized under the laws of Australia ("gTrade") from the 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. On the Closing Date, pursuant to the terms of the Asset
Transfer Agreement, the Company delivered a promissory note in the principal
amount of $300,000 (the "Note"), with a maturity date of May 31, 2010. The Note
was to be paid, at our option, in cash or by delivery of the number of shares of
Company's common stock based on the daily average closing price of the Company's
common stock from the Closing Date until the date of issuance of the stock. On
May 31, 2010 the Note was satisfied by the issuance of 300,000 shares of our
common stock at an agreed value of $300,000. On March 12, 2010, we entered into
a Consulting Agreement with the Sellers. The agreement calls for the Sellers to
perform software technical advisory services at the times and the locations
specified by us. The term of the agreement is for a twelve month period. The
compensation for this agreement is in the form of cash compensation of AUD 100
plus GST per hour, inclusive of any and all applicable taxes and benefits,
including payroll tax and superannuation, in Australia and other jurisdictions.
We intend to use the acquired source code to develop new marketing services for
On February 3, 2011, the Company had entered into Shareholders-, Company
Formation and Capital Increase Agreement between Smartlaunch A/S, Rainmaking
Holding 1 ApS, Perfect Best International Ltd, and Hans Pandeya. whereby
pursuant to the terms and conditions of the Agreement, the Company jointly with
other parties should buy or form the Company under the laws of Denmark as a
jointly owned company with a nominal share capital of DKK 81,000, of which
55.56% ownership belongs to Business Marketing Services, Inc. Immediately after
formation of the Company, Smartlaunch A/S shall subscribe for 9,000 new shares
in the Company against injecting the Software as a substance capital injection.
Following SL's subscription for shares, the ownership shall be as follows:
Shareholder Shareholding Percentage
RM 18,000 20 %
SL 9,000 10 %
PBI 18,000 20 %
BMSV 45,000 50 %
Total: 90,000 100 %
3--------------------------------------------------------------------------------BMSV will assist the newly formed Company in developing the business in the US
and India and be responsible for innovation and product development of the
Company; whereby, the Company shall pay 50% of the Company's net revenues in
return on a quarterly basis.
BMSV is 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 nominal price if the
following milestones are not achieved:
- Turnover 2012 minimum DKK five (5) million. The share call option based in
this milestone must be executed before April 1, 2013.
- "SL Free" software completed by June 1, 2011. The share call option based in
this milestone must be executed before June 20, 2011.
On February 25, 2011, BMSV bought 9,000 shares of the newly formed Company
-Adcore Aps from Smartlaunch Systems A/S for SEK 654,648.
We might alter our plans if we do not succeed in raising funds to start the
projects or if we do not succeed in obtaining license agreements that are
essential for the business we envisage. We currently have a team of 5 people
working part-time with business development, legal and accounting work in the US
and 3 people working part-time in Australia. In addition, we are working with
researchers and developers in Norway, Denmark, Israel, UK, the US and Egypt to
design services and develop our business model.
An overview of our plans follows here.
We believe that a user's social experience in interactions with users with
similar interests and tastes are a key factor that drives the emergence of
networks, and that system designs that enhance this experience and harness the
capabilities of a network of like-minded users, add significant value to a
Each of our plans is based on this fundamental principal. All systems we intend
to create are user-centric and identify clusters of similar users in some
respect to create optimum solutions.
Transaction module plan
We are planning to use gTrade's technology to develop marketing services for
businesses and to develop marketplaces for intellectual property rights and
copyright where consumers and investors can invest in and transact with
businesses. An example is a marketplace for mobile apps where consumers and
investors can invest in and transact with creators and developers to realize
their creations. Another example is a marketplace for digital entertainment that
acts as a link between traditional record companies, the publishers and artists
on one side and the music fans on the other. Music fans are the consumers or
investors in this example.
Recommendation module plan
We are creating partnerships to access state-of-the-art technology for matching
consumers and investors with businesses to transact in our marketplaces with
minimum information asymmetry and optimum allocation of financial resources. For
example, we intend to use the technology to design systems that match consumers
of digital entertainment who most likely will invest in and transact with
content providers, rights holders and artists to create maximum value for all
--------------------------------------------------------------------------------Distribution module plan
Intellectual property rights laws and copyright laws are difficult to enforce on
the Internet. We believe that the main reason for this is that technology used
today for transactions on the Internet is not up to date and in fact is so
outdated that efficient enforcement of intellectual property rights laws and
copyright laws is not possible. As outdated technology is the de-facto standard,
it prevents outdated architectures from being replaced. This problem provides
impetus to new policies being introduced to increase surveillance of users and
strike against infringement of property rights, which in turn raises privacy
issues. We believe that we can create value for businesses by making enforcement
of property rights more efficient and by lowering distribution costs to a
minimum with new technology. We believe that we can create value for consumers
by lowering costs and improving the quality of service.
We are creating partnerships to access state-of-the-art technology for storage
and delivery of digital content to consumers with maximum efficiency. As
mentioned above, technologies and architectures that are widely used are the
de-facto standard and thus difficult to replace with systems that are superior
from a technical point of view. We intend to make certain strategic acquisitions
to facilitate the introduction of our technologies.
Rewards module plan
We intend to create systems to identify networks of like-minded people within
certain communities, for example, within a file-sharing community, and encourage
sharing of resources to create a cooperative environment by rewarding them. When
users contribute their unused resources to a common pool, the opportunity to
monetize idle capacity is created. Revenues created in this cooperative
environment can then be passed on to the users in the form of credits. Rewarding
users with credits for sharing resources is similar to traditional rewards
programs such as frequent flier programs. A user in a file-sharing community
thus becomes a service provider with our technology and earns an income from his
file-sharing activities, which he can spend on his consumption of digital
Strategic acquisitions plan
As mentioned earlier, we intend to make certain strategic acquisitions to
facilitate the introduction of technologies we will use. However, a successful
acquisition and a successful introduction of next generation file-sharing
technology for storage and distribution of digital content will not necessarily
give intended results as licensing agreements for content delivered with next
generation file-sharing technology are not yet available from many content
providers and rights-holders.
While our plans are broad, they are modular and inter-independent to reduce our
business risks. A failure in a module, for example, failure in our plan to make
certain acquisitions to facilitate the introduction of the technologies will not
affect the transaction module plan. While the business activities in the
different modules reinforce each other to increase the overall business's
profitability and sustainability, the modules are not a pre-requisite for each
others' existence or essential for the overall business.
This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section should be read in conjunction with the accompanying
unaudited interim financial statements which have been prepared assuming that we
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. Our
recurring losses from operations and net capital deficiency raise substantial
doubt about our ability to continue as a going concern. Our ability to continue
as a going concern is substantially dependent on the successful execution of our
strategic plan and otherwise discussed in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section and in Note
1, "Liquidity" to our interim financial statements filed as part of this
Quarterly Report, on the timeline contemplated by our plans and our ability to
obtain additional financing. The uncertainty of successful execution of our
plans, among other factors, raises substantial doubt as to our ability to
continue as a going concern. The accompanying unaudited interim financial
statements do not include any adjustments that might result from the outcome of
Results of Operations
The Company generated $239,781 revenues for the nine months ended September 30,
2012 as compared to $90,474 for the nine months ended September 30, 2011.
The Company had no officer compensation for the nine months ended September 30,
2012. The Company incurred $100,148 of officer compensation for the nine months
ended September 30, 2011.
The Company incurred $175,607 in professional fees for the nine months ended
September 30, 2012, as compared to $44,726 for the nine months ended September
General and Administrative Expenses
The company incurred general and administrative expenses of $12,990 for the nine
months ended September 30, 2012, as compared to $11,371 for the nine months
ended September 30, 2011.
Liquidity and Capital Resources
As of September 30, 2012 we had $112,661 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 and Chief Executive officer,
Hans Pandeya. Management intends to raise additional funds by way of a public or
private offering. Management believes that the recent change in 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 its business plan and generate
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
Nine Months Ended
Net cash provided (used) by operating activities 2012 2011
Operating Activities 80,549 27,604 )
Investing Activities - -
Financing Activities (11,293) 37,432
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.
Basis of Accounting
The Company's financial statements are prepared in accordance with U.S.
generally accepted accounting principles.
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.
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