PURA NATURALS, INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - PURA NATURALS, INC.	Financial_Report.xls
EX-33.1 - EXHBIT 32.L - PURA NATURALS, INC.	ex32_1.htm
EX-31.1 - EXHBIT 31.L - PURA NATURALS, INC.	ex31_1.htm
EX-31.2 - EXHBIT 31.2 - PURA NATURALS, INC.	ex31_2.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended: June 30, 2014

Commission File Number 000-54888

YUMMY FLIES, INC.

(Exact name of registrant as specified in its charter)

Colorado		20-8496798
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

1848 South Lamar Ct.

Lakewood, CO 80232

(Address of principal executive offices) (Zip Code)

(303) 619-2503

(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 þ No o.

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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

The number of shares of the registrant’s only class of common stock issued and outstanding as of August 12, 2014, was 10,278,000 shares.

TABLE OF CONTENTS

		Page No.

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013 (audited)	4
	Unaudited Condensed Statements of Operations for the Three and Six Month Periods Ended June 30, 2014 and 2013	5
	Unaudited Condensed Statements of Changes in Stockholders' Equity (Deficit) for the Period from December 31, 2012 Through June 30, 2014	6
	Unaudited Condensed Statements of Cash Flows for the for the Six Month Periods Ended June 30, 2014 and 2013	7
	Notes to Unaudited Condensed Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation.	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	16
Item 4.	Controls and Procedures.	16

	PART II
	OTHER INFORMATION

Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
	Signatures	19

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Yummy Flies, Inc.

CONDENSED UNAUDITED FINANCIAL STATEMENTS

For The Three and Six Month Periods Ended June 30, 2014 and 2013

(Unaudited)

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Yummy Flies, Inc.
Condensed Balance Sheets

	Unaudited			Audited
	June 30,			December 31,
	2014			2013
ASSETS

Current Assets
Cash in bank	$	226		$	1,257
Inventory		988			714
Total Current Assets		1,214			1,971

Property & Equipment

Equipment (net of accumulated depreciation $2,593, $2,593 respectively)		-			-

TOTAL ASSETS	$	1,214		$	1,971

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable	$	54,340		$	28,842
Advances from shareholders		22,405			17,194
Total Current Liabilities		76,745			46,036

TOTAL LIABILITIES		76,745			46,036

Stockholders' Deficit
Common stock (par value $.001; authorized 100,000,000 shares;
issued and outstanding 10,278,000)		10,278			10,278
Capital paid in excess of par value		32,447			32,447
Accumulated deficit		(118,256	)		(86,790	)
TOTAL STOCKHOLDERS' DEFICIT		(75,531	)		(44,065	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,214		$	1,971


See accompanying notes to condensed unaudited financial statements

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Yummy Flies, Inc.
Condensed Statements of Operations


	Unaudited			Unaudited			Unaudited			Unaudited
	Three Months			Three Months			Six Months			Six Months
	Ended June 30,			Ended June 30,			Ended June 30,			Ended June 30,
	2014			2013			2014			2013

REVENUES	$	197		$	-		$	256		$	422

COST OF GOODS SOLD		62			-			85			-

Gross Profit		135			-			171			422

OPERATING EXPENSES
OPERATING EXPENSES
Accounting		6,200			-			9,950			600
General and administrative		2,025			55			2,109			665
Legal		7,876			-			19,578			-
Total operating expenses		16,101			55			31,637			1,265

(Loss) from operations		(15,966	)		(55	)		(31,466	)		(843	)

Net (loss)	$	(15,966	)	$	(55	)	$	(31,466	)	$	(843	)

Earnings (Loss) Per Share: Basic and Diluted	$	(0.00	) *	$	(0.00	) *	$	(0.00	) *	$	(0.00	) *

Weigthed Average Common Shares Outstanding: Basic and Diluted		10,278,000			10,278,000			10,278,000			10,278,000

See accompanying notes to condensed unaudited financial statements

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Yummy Flies, Inc.
Condensed Statements of Changes in Shareholders' Deficit

	Number Of				Capital Paid
	Common		Common		in Excess		Retained
	Shares Issued		Stock		of Par Value		(Deficit)			Total

Balance at December 31, 2012 - audited		10,278,000	$	10,278	$	32,447	$	(63,983	)	$	(21,258	)

Net (loss) for the year		-		-		-		(22,807	)		(22,807	)

Balance at December 31, 2013 - audited		10,278,000		10,278		32,447		(86,790	)		(44,065	)

Net (loss) for the six month period ended June 30, 2014		-		-		-		(31,466	)		(31,466	)

Balance at June 30, 2014 - unaudited		10,278,000	$	10,278	$	32,447	$	(118,256	)	$	(75,531	)

See accompanying notes to condensed unaudited financial statements

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Yummy Flies, Inc.
Comdensed Statements of Cash Flows

	Unaudited			Unaudited
	Six Months			Six Months
	Ended June 30,			Ended June 30,
	2014			2013

Net (loss)	$	(31,466	)	$	(843	)
Adjustments to reconcile net loss to net cash used in operating activities:

Movement in operating assets and liabilities:
Decrease (increase) in inventory		(274	)		35
Increase (decrease) in current liabilities		25,498			-

Net cash (used) in operation activities		(6,242	)		(808	)

Cash flows from investing activities

Net cash provided by (used in) investing activities		-			-

Cash flows from financing activities
Advances from shareholder - borrowings		5,211			1,180

Net cash provided by financing activities		5,211			1,180

Net increase in cash		(1,031	)		372

Cash at beginning of period		1,257			454

Cash at end of period	$	226		$	826

Supplemental information:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

See accompanying notes to condensed unaudited financial statements

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Yummy Flies, Inc.

Notes to Condensed Unaudited Financial Statements

For the Three and Six Month Periods Ended June 30, 2014 and 2013

Note 1 – Nature of Operations/Activities

Yummy Flies, Inc. Inc. (the “Company”), was incorporated in the State of Colorado on December 26, 2005 (Inception). The Company was formed to produce and distribute flies and other fishing supplies, as well as instructional DVD’s. The Company may also engage in any business that is permitted by law, as designated by the board of directors of the Company.

The Company’s activities are subject to significant risks and uncertainties including failure to secure funding to grow the operations.

Note 2 – Going Concern

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at June 30, 2014 the Company had current assets, comprising of cash and inventory, of $1,214 and current liabilities of $76,745 resulting in a working capital deficit of $75,531. The Company has experienced losses since Inception (December 26, 2005) and has an accumulated deficit of $118,256 as at June 30, 2014. This raises substantial doubt about the Company’s ability to continue as a going concern.

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and, or, the private placement of common stock.

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 3 - Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is December 31.

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Yummy Flies, Inc.

Notes to Condensed Unaudited Financial Statements

For the Three and Six Month Periods Ended June 30, 2014 and 2013

Note 3 - Summary of Significant Accounting Policies (Continued)

INTERIM FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. The results of operations for the three and six month periods ended June 30, 2014 are not necessarily indicative of the results expected for the fiscal year ending December 31, 2014.

For a complete set of footnotes, reference is made to the Company’s Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission and the audited financial statements included therein.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles 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 reporting period. Actual results could differ from those estimates.

DEVELOPMENT STAGE ENTITIES

The Company is a development stage company as defined under the then current Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development-Stage Entities”. Additional disclosures required as a development stage company are that our financial statements be identified as those of a development stage company, and that the statements of operations, changes in members’ deficit and cash flows disclosed activity since the date of our Inception (October 11, 2011). Effective June 10, 2014, the FASB changed its regulations with respect to development stage entities and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2015, with the option for entities to early adopt these new provisions. We have elected to early adopt these provisions and consequently these additional disclosures are not included in our financial statements.

CASH AND CASH EQUIVALENTS

The Company considered demand deposits and highly liquid-debt instruments purchased with maturity of three months or less to be cash equivalents.

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Yummy Flies, Inc.

Notes to Condensed Unaudited Financial Statements

For the Three and Six Month Periods Ended June 30, 2014 and 2013

Note 3 - Summary of Significant Accounting Policies (Continued)

INVENTORIES

Inventories are stated at the lower of cost or market (first-in, first-out method).

FINANCIAL INSTRUMENTS

The Company has adopted the guidance of ASC 820, “Fair Value Measurement” which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The Company’s financial instruments consist principally of cash, accounts payable and advances from shareholders. The recorded values of all these financial instruments approximate their current fair values because of the short term nature of these financial instruments.

DEPRECIATION AND AMORITIZATION

Furniture, fixtures and equipment are stated at cost and are depreciated over their estimated economic lives ranging from 5 to 7 years. Depreciation is computed using the straight-line method.

INCOME TAXES

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, 2014, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.

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Yummy Flies, Inc.

Notes to Condensed Unaudited Financial Statements

For the Three and Six Month Periods Ended June 30, 2014 and 2013

Note 3 - Summary of Significant Accounting Policies (Continued)

REVENUE RECOGNITION

The Company produces custom flies and instructional DVD’s related to sport and recreational fishing. The Company recognizes revenue in accordance with Accounting Standards Codification No. 605, “Revenue Recognition” ("ASC-605"), ASC-605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

ADVERTISING COSTS

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during the three and six months ended June 30, 2014 and 2013.

STOCK BASED COMPENSATION

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. To date, the Company has not adopted a stock option plan and has not granted any stock options.

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 has no potentially dilutive debt or equity instruments issued and outstanding during the three and six month periods ended June 30, 2014 or 2013.

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Yummy Flies, Inc.

Notes to Condensed Unaudited Financial Statements

For the Three and Six Month Periods Ended June 30, 2014 and 2013

Note 3 - Summary of Significant Accounting Policies (Continued)

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 other than in respect of the early adoption of the new regulations relating to Development Stage Entities as discussed above.

Note 4 – Stockholders’ Deficit

The Company is authorized to issue 100,000,000 shares of $0.001 par value common stock.

No shares we issued during the three and six months ended June 30, 2014 and 2013.

As at June 30, 2014 the Company had 10,278,000 shares of common stock issued and outstanding.

The Company has declared no dividends through June 30, 2014.

Note 5 - Related Party Activity

An officer/shareholder of the Company has advanced monies to pay expenses on behalf of the Company. The balance due the officer/shareholder was $22,405 and $17,194 at June 30, 2014 and December 31, 2013, respectively. The loan does not accrue interest, is unsecured and is due upon demand.

Note 6 – Subsequent Events

In preparing these financial statements, the Company has analyzed its operations subsequent to June 30, 2014 to the date these financial statements were available to be issued on August 12, 2014, and has determined that it does not have any material subsequent events to disclose in these financial statements.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Yummy Flies, Inc., (“we,” “our” or the “Company”) was incorporated on December 26, 2005, in the State of Colorado under the name “Yummieflies.com Inc.” In March 2010 we filed an amendment to our Articles of Incorporation changing our name to “Yummy Flies, Inc.” In September 2010, we engaged in a forward split of our issued and outstanding Common Stock whereby nine (9) shares of Common Stock were issued in exchange for every one (1) share then issued and outstanding. All references to our issued and outstanding Common Stock in this Report are presented on a post-forward split basis unless otherwise indicated.

Since inception our business has been to establish an on-line fly fishing company, specializing in marketing trout flies. We also plan to market a series of fly tying DVD’s. Our principal marketing efforts are directed to the post-war “Baby Boomers.”

We have never been subject to any bankruptcy proceeding.

Our executive offices are located at 1848 South Lamar Ct., Lakewood, CO 80232, telephone (303) 619-2503.

Results of Operations

Comparison of Results of Operations for the three months ended June 30, 2014 and 2013

During the three months ended June 30, 2014, we generated revenues of $197, compared to no revenue generated during the three months ended June 30, 2013. Cost of sales for the three months ended June 30, 2014 was $62 (2013-$0) and consequently our gross profit was $135 for the three months ended June 30, 2014 (2013-$0).

Operating expenses during the three months ended June 30, 2014 were $16,101, compared to $55 during the three months ended June 30, 2013. This increase was as a result of increased legal and accounting fees associated with our reporting requirements now that we are a reporting company, as well as legal fees relating to our successful effort to have our common stock approved for trading on the OTCQM.

As a result, we incurred a net loss of $15,966 during the three months ended June 30, 2014 ($0.00 per share) compared to a net loss of $55 during the three months ended June 30, 2013.

Comparison of Results of Operations for the six months ended June 30, 2014 and 2013

During the six months ended June 30, 2014 we generated revenues of $256, compared to revenues of $422 generated during the six months ended June 30, 2013, a decrease of $166, which we attribute to inclement weather in the Rocky Mountain region during the spring of 2014, our principal sales and marketing region. Cost of sales for the three months ended June 30, 2014 was $85 (2013-$0) and consequently our gross profit was $171 for the six months ended June 30, 2014 (2013-$422).

Operating expenses during the six months ended June 30, 2014 were $31,637, compared to $1,265 during the six months ended June 30, 2013, an increase of approximately $30,000. This increase was primarily as a result of increased legal and accounting fees associated with our reporting requirements now that we are a reporting company, as well as legal fees relating to our successful attempt to have our common stock approved for trading on the OTCQM.

As a result, we incurred a net loss of $31,466 during the six months ended June 30, 2014 ($0.00 per share) compared to a net loss of $823 during the six months ended June 30, 2013.

Because we have generated nominal revenues, following is our Plan of Operation.

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Plan of Operation

We are currently marketing a series of fly fishing flies under the titles of “Yummy Tandem Flies,” “Natural Selection” and “Canyon Magic.” We attempt to create our flies with a degree of realism. Specifically, most flies are tied with thread, dubbing and feathers and fur. Our “Natural Selection” flies are tied with latex and microfibetts to form a smooth, translucent body, with realistic wings and legs. The Tandem Flies are tied with two and even three bodies of nymphs and/or larva flies on the same hook shank. Traditional flies are tied one fly body at a time on the hook. Each series is tied by one of our founders.

In addition, we have produced a series of five fly tying DVDs entitled “The Natural Selections Series” which demonstrates how to tie our line of realistic Midges; Mysis Shrimp, Caddis, Baetis, and Scud patterns. A DVD was initially produced on a limited run basis by Mr. Yamauchi to test the viability of marketing a series of Fly Tying DVD’s that showed how to tie his signature patterns. This was marketed at the International Sportsman Expo in Denver, Colorado in 2006 and at the West Denver Trout Unlimited annual Fly Tying Clinic held in 2007. We intend to place all of our videos in area fly shops once we receive additional funding to allow us to deliver these videos in sufficient quantity and quality. However, as of the date of this report we have no commitment from anyone to provide this funding and no arrangement with any area fly shops to sell our DVD’s.

We estimate we will require up to $500,000 in additional capital in order to fully implement our business plan. These funds are proposed to be utilized for our development and expansion from just a retail web based business to a retail and wholesale operation, including the following proposed use of proceeds: (i) approximately $100,000 to purchase raw materials that we utilize in the manufacturing of our flies in bulk, including hooks, latex gloves and other related materials. Included in this category would be the identification of a manufacturer who can produce our custom made ties in bulk by developing and utilizing injection molding with soft polyurethane plastics and polmers, in order to establish an expanded inventory of our ties. We currently do not have the capacity to fill a large order that we might receive from a large retail fishing business; (ii) $50,000 for the development and marketing of additional DVD’s; (iii) approximately $100,000 to increase our inventory of custom ties, including the development of relationships with other established ties designers and retention of additional employees to assist in these expanded operations. It is anticipated that these new employees will have accounting experience, as well as sales and marketing experience; (iv) approximately $25,000 for expansion of our existing website from a retail based marketing vehicle into a retail and wholesale marketing operation; and (v) approximately $100,000 to accomplish the acquisition of related businesses and provide working capital to these business upon acquisition. The balance of funds ($125,000) would be utilized for repayment of debt and working capital. If we can raise only $225,000 we believe we can successfully accomplish the objectives outlined in (i), (iii) and (iv) and become profitable. Once profitable, we believe there are opportunities that will arise to expand our business without this additional capital, but over a longer period of time. This includes acquiring competitors in exchange for issuance of our securities. However, there can be no assurances that we will be able to raise the capital required to accomplish these objectives, or if we are so successful in raising such capital, that we will be able to implement our business plan.

We estimate that it will take approximately 3 years for us to accomplish all of the objectives described in the preceding paragraph, provided that we are able to raise $500,000. We believe the most time consuming aspect of our business plan is the identification of a manufacturing entity, either in the US or overseas, that can develop the molds and then begin manufacturing our ties to our specifications. We estimate that this will take a minimum of two years. Following this development we also estimate that it will take another year in which to develop the sales and marketing to sell these products. As previously stated, there are no assurances that our estimates are accurate, or that we will be able to raise the funds necessary to accomplish these objectives.

Because of our relatively low cost of operations we believe that if we are only able to raise approximately $225.000, we will continue to be a retail web based business, but we will not be able to afford expanding into the wholesale market. While no assurances can be provided, with an additional $225,000 in equity capital we believe we would be able to repay all debt and successfully increase our inventory of fishing flies and as a result, we believe that the revenues generated from the sale of these flies will be sufficient to allow us to break even or generate nominal profits. There can be no assurances that this will occur.

We became a reporting company during 2014 and have had our common stock approved for trading. We expected that the success of these two endeavors would have made our common stock more attractive to investors, who had previously advised us that they would be more amenable to making an equity investment in our Company once we accomplished these two objectives. However, our recent attempts to attract equity investors has not been successful. If these efforts continue to be unsuccessful it is doubtful we will be able to implement our business plan and we will be forced to try to identify another business in order to provide liquidity and financial upside to our shareholders. If our Board of Directors elects to seek out other opportunities, the integrity and reputation of any potential acquisition candidate will first be thoroughly reviewed to ensure it meets with management’s standards. Once targeted as a potential acquisition candidate, we will enter into negotiations with the potential candidate and commence due diligence evaluation of the business, including its financial statements, cash flow, debt, location and other material aspects of the candidates’ business. If we are successful in our attempts to acquire a company utilizing our securities as part or all of the consideration to be paid, our current shareholders will incur dilution.

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Liquidity and Capital Resources

As of June 30, 2014, we had $226 in cash.

At June 30, 2014, we had current assets, comprising of cash and inventory, of $1,214 and current liabilities of $76,745 resulting in a working capital deficit of $75,531. We have experienced losses since our inception (December 26, 2005) and had an accumulated deficit of $118,256 at June 30, 2014. This raises substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Net cash used in operating activities was $6,242 during the six months ended June 30, 2014, compared to $808 during the six months ended June 30, 2013. We anticipate that overhead costs in current operations will increase in the future if we are successful in raising the capital described herein as a result of our anticipated increased marketing activities.

Cash flows provided or used in investing activities were $0 during the six months ended June 30, 2014 and 2013.

Cash flows provided or used by financing activities were $5,211 and $1,180 during the six months ended June 30, 2014 and 2013 and related to funds advanced to us by one of our officers and principal shareholders.

To date, our operations have been limited and we have only generated nominal revenues. We believe that our principal difficulty has been the lack of available capital to operate and expand our business. We believe we need a minimum of approximately $225,000 in additional working capital to be utilized for repayment of debt, marketing and sales of our existing products, including hiring a marketing/sales person, advertising brochures and a presence at fly shows (booth space) (estimated cost of $35,000), generate an inventory of DVD’s and flies ($35,000) and develop a marketing kit for distribution ($20,000), with the balance for working capital and general and administrative expense. As described above under “Plan of Operation” we also believe we will require a total of up to $500,000 in additional capital to fully implement our business plan, as described herein. While no assurances can be provided, we believe that if we are only able to raise $100,000 we should be able to successfully increase our inventory of fishing flies and as a result, we believe that the revenues generated from the sale of these flies will be sufficient to allow us to continue to grow. We lack a market presence that is needed in order for us to succeed. As of the date of this Report we have no commitment from any investor or investment-banking firm to provide us with the necessary funding and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits in the future and may cause us to abandon our current business plan and seek out other new business opportunities in order to establish liquidity and value for our shareholders..

Inflation

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 six-month period ended June 30, 2014.

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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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures – Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Report.

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to 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 and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of June 30, 2014, at the reasonable assurance level. We believe that our financial statements presented in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

Inherent Limitations – Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

Changes in Internal Control over Financial Reporting – There were no changes in our internal control over financial reporting during our three month period ended June 30, 2014, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, 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 were not subject to any legal proceedings during the three and six months ended June 30, 2014 or 2013 and, to the best of our knowledge; no legal proceedings are pending or threatened.

ITEM 1A. RISK FACTORS

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We did not issue any of our securities during the three months ended March 31, 2014.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

EXHIBIT
NUMBER		DESCRIPTION

31.1		Certification pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

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SIGNATURES

Pursuant to the requirements of Section 12 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 on August 13, 2014.

	YUMMY FLIES, INC.


By:	/s/ Gary Okizaki
	Gary Okizaki , Principal Executive Officer

By:	/s/ Brian Yamauchi
	Brian Yamauchi , Principal Financial Officer and Principal Accounting Officer

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PURA NATURALS, INC. - FORM 10-Q - August 13, 2014

Attached files

PURA NATURALS, INC. Reports