XOTC:BONI Bonamour Inc Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)

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

For the quarterly period ended
March 31, 2012
 
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
 
to
 

Commission File No.
000-53186

BONAMOUR, INC.
(Exact name of registrant as specified in its charter)

Colorado
 
37-1441050
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

5190 N. Central Expressway, Suite 900, Dallas, Texas
75206-5141
(Address of principal executive offices)
(Zip Code)

(214) 855-0808
(Registrant’s telephone number, including area code)

 
(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.   Yes  x  No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨                                                                                     Accelerated filer  ¨

Non-accelerated filer ¨                                                                           Smaller reporting company x

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

The number of shares outstanding of the Registrant’s Common Stock as of May 9, 2012 was 199,500,000.
 
 
 
 

 

TABLE OF CONTENTS
 
     
   
Page
   
PART I –FINANCIAL INFORMATION
1
ITEM 1.
FINANCIAL STATEMENTS
1
 
Condensed Balance Sheets as of March 31, 2012 (Unaudited) and
December 31, 2011 (Audited)
 
1
 
Condensed Statements of Operations for the Three Months Ended March 31, 2012 and 2011
 and for the Period from Inception August 9, 2002 (Inception) through March 31, 2012 (Inception)
2
 
Statement of Stockholders’ Deficit For the Period From August 9, 2002 (Inception)
through March 31, 2012 (Unaudited)
 
3
 
Condensed Statements of Cash Flows for the Three Months Ended
March 31, 2012 and 2011 and for the Period from Inception (August 9, 2002)
 through March 31, 2012 (Unaudited)
 
 
4
 
Notes to Condensed Financial Statements
5
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
7
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
9
ITEM 4.
CONTROLS AND PROCEDURES
9
     
PART II – OTHER INFORMATION
10
ITEM 1.
LEGAL PROCEEDINGS
10
ITEM 1A.
RISK FACTORS
10
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
10
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
10
ITEM 4.
MINE SAFETY DISCLOSURES
10
ITEM 5.
OTHER INFORMATION
10
ITEM 6.
EXHIBITS
10
     
SIGNATURES
 
10
 
 
 
 

 
 
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
 
BONAMOUR, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
CONDENSED BALANCE SHEETS
 
             
             
   
March 31,
   
December 31,
 
   
2012
   
2011
 
   
(unaudited)
   
(audited)
 
             
ASSETS
           
             
Current Assets:
           
Cash
  $ 1,478,651     $ 1,511,338  
Amount due from related party
    33,381       -  
Prepaid expense
    1,375       2,750  
                 
     Total current assets
    1,513,407       1,514,088  
                 
Other Assets:
               
Software development costs, net of amortization
               
  of $3,750 and $2,500, respectively
    11,250       12,500  
                 
     Total other assets
    11,250       12,500  
                 
Total assets
  $ 1,524,657     $ 1,526,588  
                 
 LIABILITIES AND STOCKHOLDERS' DEFICIT
               
 
               
Current Liabilities:
               
Customer deposit-related party
  $ 1,511,250     $ 1,511,250  
Accounts payable
    57,384       20,353  
                 
     Total current liabilities
    1,568,634       1,531,603  
                 
Commitments and Contingencies
               
                 
Stockholders' Deficit:
               
Preferred stock - no par value; 25,000,000 shares authorized;
               
       5,000,000 shares issued and outstanding
    210,000       210,000  
Common stock - no par value; 500,000,000 shares authorized;
               
       199,500,000 shares issued and outstanding
    15,000       15,000  
Additional paid in capital
    32,756       32,756  
Deficit accumulated during development stage
    (301,733 )     (262,771 )
                 
     Total stockholders' deficit
    (43,977 )     (5,015 )
                 
Total liabilities and stockholders' deficit
  $ 1,524,657     $ 1,526,588  
 
 
The accompanying footnotes are an integral part of these financial statements.
 
 
1

 
 
BONAMOUR, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
CONDENSED STATEMENTS OF OPERATIONS
 
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND
 
FOR THE PERIOD FROM AUGUST 9, 2002 (INCEPTION) THROUGH MARCH 31, 2012
 
(UNAUDITED)
 
                   
               
August 9, 2002
 
               
(Inception)
 
   
Three Months Ended
   
through
 
   
March 31, 2012
   
March 31, 2011
   
March 31, 2012
 
                   
                   
Revenues, net
  $ -     $ -     $ 4,500  
                         
Operating expenses:
                       
Selling, general and administration
    37,712       73,429       302,483  
Amortization expense
    1,250       -       3,750  
                         
     Total operating expenses
    38,962       73,429       306,233  
                         
Loss before taxes
    (38,962 )     (73,429 )     (301,733 )
                         
Provision for income taxes
    -       -       -  
                         
Net loss
  $ (38,962 )   $ (73,429 )   $ (301,733 )
                         
Loss per share, basic and diluted
  $ (0.00 )   $ (0.00 )        
                         
Weighted average number of shares outstanding
    199,500,000       199,500,000          
 
The accompanying footnotes are an integral part of these financial statements.
 
 
 
2

 
 
BONAMOUR, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF STOCKHOLDERS' DEFICIT
 
FOR PERIOD FROM AUGUST 9, 2002 (INCEPTION) THROUGH MARCH 31, 2012
 
UNAUDITED
 
                                           
                                           
   
Preferred Stock
   
Common Stock
   
Additional Paid
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
in Capital
   
Deficit
   
Total
 
                                           
                                           
Balance, August 9, 2002 (inception)
    -     $ -       -     $ -     $ -     $ -     $ -  
                                                         
Shares issued to founders
    -       -       199,500,000       15,000       -       -       15,000  
Net loss
    -       -       -       -       -       (43 )     (43 )
                                                         
Balance, December 31, 2002
    -       -       199,500,000       15,000       -       (43 )     14,957  
                                                         
Net loss
    -       -       -       -       -       (14,954 )     (14,954 )
                                                         
Balance, December 31, 2003
    -       -       199,500,000       15,000       -       (14,997 )     3  
                                                         
Net loss
    -       -       -       -       -       -       -  
                                                         
Balance, December 31, 2004
    -       -       199,500,000       15,000       -       (14,997 )     3  
                                                         
Net loss
    -       -       -       -       -       (57 )     (57 )
                                                         
Balance, December 31, 2005
    -       -       199,500,000       15,000       -       (15,054 )     (54 )
                                                         
Net loss
    -       -       -       -       -       (45 )     (45 )
                                                         
Balance, December 31, 2006
    -       -       199,500,000       15,000       -       (15,099 )     (99 )
                                                         
Net income
    -       -       -       -       -       2       2  
                                                         
Balance, December 31, 2007
    -       -       199,500,000       15,000       -       (15,097 )     (97 )
                                                         
Net loss
    -       -       -       -       -       (6,170 )     (6,170 )
                                                         
Balance, December 31, 2008
    -       -       199,500,000       15,000       -       (21,267 )     (6,267 )
                                                         
Net loss
    -       -       -       -       -       (16,700 )     (16,700 )
                                                         
Balance, December 31, 2009
    -       -       199,500,000       15,000       -       (37,967 )     (22,967 )
                                                         
Forgiveness of debt-related party
    -       -       -       -       32,756       -       32,756  
Net loss
    -       -       -       -       -       (9,789 )     (9,789 )
                                                         
Balance, December 31, 2010
    -       -       199,500,000       15,000       32,756       (47,756 )     -  
                                                         
Issuance of preferred stock in
                                                       
   exchange for debt
    5,000,000       210,000       -       -       -       -       210,000  
Net loss
    -       -       -       -       -       (215,015 )     (215,015 )
                                                         
Balance, December 31, 2011
    5,000,000       210,000       199,500,000       15,000       32,756       (262,771 )     (5,015 )
                                                         
Net loss
    -       -       -       -       -       (38,962 )     (38,962 )
                                                         
                                                         
Balance, March 31, 2012
    5,000,000     $ 210,000       199,500,000     $ 15,000     $ 32,756     $ (301,733 )   $ (43,977 )
 
The accompanying footnotes are an integral part of these financial statements.
 
 
3

 
 
BONAMOUR, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
CONDENSED STATEMENTS OF CASH FLOWS
 
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND
 
FOR THE PERIOD FROM AUGUST 9, 2002 (INCEPTION) THROUGH MARCH 31, 2012
 
UNAUDITED
 
                   
               
August 9, 2002
 
               
(Inception)
 
   
Three Months Ended
   
through
 
   
March 31, 2012
   
March 31, 2011
   
March 31, 2012
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES
                 
  Net loss
  $ (38,962 )   $ (73,429 )   $ (301,733 )
     Adjustments to reconcile net loss to net cash flows
                       
       provided by (used in) operating activities:
                       
             Amortization of software development costs
    1,250       -       3,750  
     Change in operating assets and liabilities:
                       
             Prepaid expense
    1,375       (9,500 )     (1,375 )
             Customer deposit-related party
    -       -       1,511,250  
             Accounts payable
    37,031       20,719       57,384  
                         
                         
Net cash flows provided by (used in) operating activities
    694       (62,210 )     1,269,276  
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Software development costs
    -       (5,000 )     (15,000 )
             Amount due from related party
    (33,381 )     -       (33,381 )
                         
Net cash flows used in investing activities
    (33,381 )     (5,000 )     (48,381 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
  Proceeds from sale of common stock
    -       -       15,000  
  Proceeds from related party loan
    -       67,210       242,756  
                      -  
                         
Net cash flows provided by financing activities
    -       67,210       257,756  
                         
Increase (decrease)  in cash
    (32,687 )     -       1,478,651  
Cash, beginning of period
    1,511,338       -       -  
Cash, end of period
  $ 1,478,651     $ -     $ 1,478,651  
                         
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
         
                         
Issuance of preferred stock in exchange for debt
  $ -     $ -     $ 210,000  
 
The accompanying footnotes are an integral part of these financial statements.
 
 
 
 
4

 

BONAMOUR, INC.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2012

NOTE A – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Interim Financial Reporting

While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the United States of America ("GAAP").  These interim financial statements follow the same accounting policies and methods of application as used in the December 31, 2011 audited financial statements of the Bonamour, Inc. (the “Company”).  All adjustments are of a normal, recurring nature. Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the three month periods ended March 31, 2012 and 2011.  It is suggested that these interim financial statements be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2011 included in our Form 10K, filed with the Securities Exchange Commission on April 12, 2012. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that can be expected for the year ending December 31, 2012.

Development Stage Activities

The Company is presently in the development stage with no significant revenues from operations.  Accordingly, all of the Company’s operating results and cash flows reported in the accompanying financial statements are considered to be those related to development stage activities and represent the cumulative from inception amounts from its development stage activities reported pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915-10-05, Development Stage Entities.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

NOTE B -- GOING CONCERN

The financial statements of the Company have been prepared in conformity with GAAP, and assume that the Company will continue as a going concern.  The Company expects to incur losses as it expands.  To date, the Company's cash flow requirements have been met through the sale of its common stock, cash advances from related parties, and established trade credit.  There is no assurance that additional funds will be available for the Company to finance its operations should the Company be unable to realize profitable operations. These conditions, among others, give rise to substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.

NOTE C – CUSTOMER DEPOSIT-RELATED PARTY

On December 28, 2011, the Company accepted a purchase order from Bon Amour International, LLC, the majority shareholder of the Company (“BAI”), pursuant to which the Company will deliver certain Bonamour branded products to BAI for consumer resale by BAI in Asia.  The payment terms called for an advance payment of $1,511,250.  The payment was received on December 30, 2011 and recorded as customer deposit-related party on the Company’s financial statements.
 
 
 
5

 

BONAMOUR, INC.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2012

NOTE D – RELATED PARTIES

During the three months ended March 31, 2012, the Company advanced BAI $33,381.  BAI provides office space for the Company at no charge.  Management considers the Company's current office space arrangement adequate.

NOTE E – INCOME TAXES

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company does not expect to pay any significant federal or state income tax for 2012 as a result of the losses recorded during the three months ended March 31, 2012 as well as additional losses expected for the remainder of 2012 as well as from generating net operating loss carry forwards from prior years.  Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.  As of March 31, 2012, the Company maintains a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded.  There were no recorded unrecognized tax benefits at the end of the reporting period.
 
 
 
 
 
6

 
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We urge you to read the following discussion in conjunction with management’s discussion and analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2011, as well as with our condensed financial statements and the notes thereto included elsewhere herein.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Our prospects are subject to uncertainties and risks. In this Quarterly Report on Form 10-Q, we make forward-looking statements in this Item 2 and elsewhere that also involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business, and reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements by words such as “if,” “may,” “might,” “will, “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” and other similar terms. These forward-looking statements include, among other things, plans for proposed operations, descriptions of our strategies, our product and market development plans, and other objectives, expectations and intentions, the trends we anticipate in our business and the markets in which we operate, and the competitive nature and anticipated growth of those markets.

We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited, to the risks and uncertainties discussed in our other filings with the SEC. We undertake no obligation to revise or update any forward-looking statement for any reason.

Overview

We are a developer, distributor and reseller of health and beauty products and originator of the “mind- body” system, a line of skincare products that we have developed and nutraceutical products we are developing to help people “live their best life.”  Our products are currently sold under the “Bonamour” name, and while we intend to continue to develop and expand our line of BonamourTM-branded mind-body products, we may in the future sell our products under different labels, or serve as a reseller or distributor of health and beauty products for third party brands.

Since early 2011, we have been developing our Bonamour-branded skincare products and anticipate delivery of our first shipment in July of 2012. Our current focus is on the Asian beauty and wellness market, which we believe has tremendous opportunities for expansion and growth.  While our objectives include branching out to other markets and developing a wider customer base, currently our sole customer is Bon Amour International, LLC (“BAI”), a multi-level marketing company focused on developing a global platform for entrepreneurs, wellness professionals, and individuals, which seeks to develop a global lifestyle wellness brand.  BAI has the exclusive right to sell Bonamour-branded products throughout Asia, and is our largest shareholder, holding approximately 73% of our voting stock.  BAI is controlled by Nathan Halsey, who also serves as our sole officer and director.  However, BAI is a separate company from us, and we have no economic interest in BAI or its business or operations.

Our principal office is located at 5190 North Central Expressway, Suite 900, Dallas, Texas and our telephone number is (214) 855-0808.  We are traded on the OTC Market Groups, Inc. OTCQB (the “OTCQB”) under the symbol “BONI.”  We do not currently have a corporate website.
 
 
 
7

 

Basis of Presentation of Financial Information
 
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern, which is dependent upon the Company's ability to establish itself as a profitable business.  At March 31, 2012, the Company had an accumulated deficit of $301,733, and for the three months ended March 31, 2012, incurred net losses of $38,962.  Management expects that the Company will need to raise additional capital to commence and sustain operations until such time as the Company can achieve profitability. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations.

The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.

Critical Accounting Policies

There have been no changes from the Critical Accounting Policies described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 12, 2012.

Liquidity and Capital Resources

Since our inception, we have not attained a level of operations that allows us to meet its current overhead.  We do not contemplate attaining profitable operations until we execute plans to grow our manufacture and sales operations. Nevertheless, there can be no assurance that management will be able to successfully implement such plans and if executed, there can be no assurance that operating levels sufficient to sustain profitability can ever be achieved.  We expect to be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure and expenses in order to execute plans for future operations, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

As of March 31, 2012, the Company’s cash balance was $1,478,651 and we had liabilities totaling $1,568,634, which include $1,511,250 deposits made for the purchase of product by BAI for resale.  At March 31, 2012 the Company’s working capital deficit was $55,227.

Since the change in control that occurred in January 2011 in which BAI acquired 90% of the then outstanding common stock of the Company, BAI, who remains the Company’s majority shareholder, has advanced funds on behalf of the Company to satisfy current legal, accounting and administrative obligations.  In December 2011, certain of these advances were converted into 5,000,000 shares of the Company’s Series A Preferred Stock.

Management expects that the Company will need to raise additional capital to sustain operations until such time as the Company can fully implement its plans of operation and achieve profitability. The terms of financing that may be raised, if any, may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, our current shareholders may need to contribute additional funds to sustain operations.

Results of Operations

Comparison of Three Months Ended March 31, 2012 and March 31, 2011

For the each of the three month periods ended March 31, 2012 and 2011, the Company had no revenue.  During the three months ended March 31, 2012, the Company had operating expenses totaling $38,962 compared to $73,429 for the same period in 2011, a decrease of $34,467.  This change is primarily a result of reduced travel expense.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.
 
 
 
8

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Nathan Halsey, our principal executive and financial officer, conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of March 31, 2012, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company's principal executive and financial officer concluded that the Company's disclosure controls and procedures as of March 31, 2012 were effective to provide reasonable assurance that information required to be disclosed in the Company’s periodic filings under the Exchange Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2012 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures provide our principal executive and financial officer with reasonable assurances that our disclosure controls and procedures will achieve their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within our company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also 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 objectives under all potential future conditions.

Management is aware that there is a lack of segregation of duties at the Company due to the fact that the Company only has one director and executive officer dealing with general administrative and financial matters. This constitutes a significant deficiency in the internal controls. Management has decided that considering the officer/director involved, the control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management plans to re-evaluate this situation periodically. In light of the Company’s current cash flow situation, the Company does not intend to increase staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.
 
 
 
9

 

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 1A.  RISK FACTORS

Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.

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

There are no unreported sales of unregistered securities during the quarter ended March 31, 2012.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

The following exhibits are filed with this Quarterly Report on Form 10-Q or are incorporated by reference as described below.

Exhibit
Description
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*
32.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350*
101.1
Interactive data files pursuant to Rule 405 of Regulation S-T*
*Filed herewith.
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
May 15, 2012
BONAMOUR, INC.
     
 
By:
/s/ Nathan Halsey
 
Nathan Halsey
 
President, Chief Executive Officer and Secretary
 (Principal Executive Officer, Principal Financial and
Accounting Officer and Authorized Signatory)
 
 
 
10

 
 

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