Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - American Housing REIT Inc. | Financial_Report.xls |
| EX-31.1 - CERTIFICATION - American Housing REIT Inc. | ontg_ex311.htm |
| EX-32.1 - CERTIFICATION - American Housing REIT Inc. | ontg_ex321.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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þ
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarter ended June 30, 2013.
OR
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o
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ___________ to ___________ .
Commission file number: 333-170828
Ontarget360 Group Inc.
(Exact name of registrant in its charter)
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Delaware
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27-1662812
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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24/F, Wyndham Place, 40-44 Wyndham Street, Central, Hong Kong
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: 852-2258-6888
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2490 Black Rock Turnpike #344, Fairfield CT, 06825
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(Former name, former address and former fiscal year, if changed since last report)
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Indicate by check mark whether the registrant (1) has filed all reports required 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 day. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
(Does not currently apply to the Registrant)
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 if the Exchange Act.
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Large accelerated filter
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Accelerated filter
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Non-accelerated filter (Do not check if a smaller reporting company)
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
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Class
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Outstanding August 14, 2013
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Common Stock, $0.001 par value per share
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3,454,520 shares
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ITEM 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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ITEM 3
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DEFAULTS UPON SENIOR SECURITIES
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ITEM 4
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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ITEM 5
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OTHER INFORMATION
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Page
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Interim Financial Statements
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| F-1 | ||||
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CONDENSED BALANCE SHEETS
JUNE 30, 2013 AND SEPTEMBER 30, 2012
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(Unaudited)
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6/30/13
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9/30/12
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| ASSETS | ||||||||
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CURRENT ASSETS:
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Cash
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$ | 1,173 | $ | 3,023 | ||||
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Accounts receivable, net
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- | 3,500 | ||||||
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TOTAL CURRENT ASSETS
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1,173 | 6,523 | ||||||
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TOTAL ASSETS
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$ | 1,173 | $ | 6,523 | ||||
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LIABILIATIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES:
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Accounts payable and accrued expenses
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$ | 18,567 | $ | 28,579 | ||||
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Accrued interest
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13,311 | 2,063 | ||||||
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Due to shareholder
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121,500 | 41,500 | ||||||
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Income tax payable
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- | 600 | ||||||
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TOTAL CURRENT LIABILITIES
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153,378 | 72,742 | ||||||
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TOTAL LIABILITIES
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153,378 | 72,742 | ||||||
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STOCKHOLDERS' DEFICIT:
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Preferred stock, $.001 par value, 5,000,000 shares authorized,
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none issued and outstanding
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- | - | ||||||
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Common stock, $.001 par value, 10,000,000 shares authorized,
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3,454,520 shares issued and outstanding.
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3,455 | 3,455 | ||||||
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Additional paid-in capital
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104,816 | 104,816 | ||||||
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Retained deficit
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(260,476 | ) | (174,490 | ) | ||||
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TOTAL STOCKHOLDERS' DEFICIT
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(152,205 | ) | (66,219 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 1,173 | $ | 6,523 | ||||
See accompanying condensed notes to interim financial statements.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
JUNE 30, 2013 AND 2012
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Three Months Ended June 30, 2013
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Three Months Ended June 30, 2012
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Nine Months Ended June 30, 2013
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Nine Months Ended June 30, 2012
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Revenues:
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Custom professional service revenues
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$ | - | $ | - | $ | 500 | $ | 10,650 | ||||||||
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Monthly subscription fees
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7,500 | 37,167 | 46,500 | 50,667 | ||||||||||||
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Monthly subscription fees - related party
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- | - | - | 1,500 | ||||||||||||
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Total Revenues
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7,500 | 37,167 | 47,000 | 62,817 | ||||||||||||
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Cost of revenues
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3,315 | 17,884 | 27,298 | 19,409 | ||||||||||||
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Cost of revenues from a related party
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- | 2,000 | - | 11,000 | ||||||||||||
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Gross Profit
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4,185 | 17,283 | 19,702 | 32,408 | ||||||||||||
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Operating expenses:
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Marketing and sales
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10,285 | - | 10,285 | |||||||||||||
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General and administrative
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13,967 | 35,113 | 91,420 | 60,126 | ||||||||||||
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General and administrative costs from a related party
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- | 12,000 | 3,000 | 20,000 | ||||||||||||
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Total operating expenses
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13,967 | 57,398 | 94,420 | 90,411 | ||||||||||||
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Other (income) expenses
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Interest expense
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3,645 | 607 | 11,248 | 1,000 | ||||||||||||
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Change in the fair value of derivative liability
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- | (725 | ) | - | (755 | ) | ||||||||||
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Total other expenses (income)
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3,645 | (118 | ) | 11,248 | 245 | |||||||||||
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Loss before taxes
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(13,427 | ) | (39,997 | ) | (85,966 | ) | (58,248 | ) | ||||||||
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Income tax provision(benefit)
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(46 | ) | - | 20 | 400 | |||||||||||
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Net loss
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$ | (13,381 | ) | $ | (39,997 | ) | $ | (85,986 | ) | $ | (58,648 | ) | ||||
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Net loss per share - basic
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Net loss per share - basic and diluted
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$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
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Weighted number of shares outstanding -
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Basic and diluted
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3,454,520 | 3,454,520 | 3,454,520 | 3,339,534 | ||||||||||||
See accompanying condensed notes to interim financial statements.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT)
FROM SEPTEMBER 30, 2011 THROUGH JUNE 30, 2013
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Preferred Stock
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Common
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Paid-In
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Sub
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Retained
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Stockholders'
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Shares
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Par Value
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Shares
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Par Value
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Capital
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Rec'b
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(Deficit)
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(Deficit)
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Balance September 30, 2011
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- | $ | - | 3,149,000 | $ | 3,149 | $ | 71,101 | $ | - | $ | (90,499 | ) | $ | (16,249 | ) | ||||||||||||||||
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Stock issued for services
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255,520 | 256 | 12,520 | 12,776 | ||||||||||||||||||||||||||||
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Sale of stock, net of offering costs
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50,000 | 50 | 21,950 | 22,000 | ||||||||||||||||||||||||||||
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Fair value of warrant issued with debt
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(24,941 | ) | (24,941 | ) | ||||||||||||||||||||||||||||
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Reclassification of derivative liability to stockholders' equity
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24,186 | 24,186 | ||||||||||||||||||||||||||||||
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Net loss for period
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(83,991 | ) | (83,991 | ) | ||||||||||||||||||||||||||||
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Balance September 30, 2012
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$ | - | 3,454,520 | $ | 3,455 | $ | 104,816 | $ | - | $ | (174,490 | ) | $ | (66,219 | ) | |||||||||||||||||
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Net loss for period
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(85,986 | ) | (85,986 | ) | ||||||||||||||||||||||||||||
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Balance June 30, 2013
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- | $ | - | 3,454,520 | $ | 3,455 | $ | 104,816 | $ | - | $ | (260,476 | ) | $ | (152,205 | ) | ||||||||||||||||
See accompanying condensed notes to interim financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
JUNE 30, 2013 AND 2012
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Nine Months Ended
June 30, 2013
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Nine Months Ended
June 30, 2012
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (85,986 | ) | $ | (58,648 | ) | ||
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Adjustments to reconcile net loss to cash used in operating activities:
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Provision for doubtful accounts
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- | 3,000 | ||||||
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Stock based compensation
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- | 12,776 | ||||||
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Change in derivative liability
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- | (755 | ) | |||||
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Change in operating assets and liabilities:
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Accounts receivable
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3,500 | (5,500 | ) | |||||
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Accrued interest
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11,248 | - | ||||||
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Income tax payable
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(600 | ) | - | |||||
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Accounts payable and accrued expenses
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(10,012 | ) | (7,021 | ) | ||||
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Net cash used in operating activities
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(81,850 | ) | (56,148 | ) | ||||
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CASH FLOW FROM FINANCING ACTIVITIES:
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Sale of common stock, net of offering costs
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- | 22,000 | ||||||
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Loan from shareholder
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80,000 | 26,500 | ||||||
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Net cash provided by financing activities
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80,000 | 48,500 | ||||||
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NET INCREASE (DECREASE) IN CASH
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(1,850 | ) | (7,648 | ) | ||||
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CASH AND CASH EQUIVALENTS at beginning of period
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3,023 | 14,622 | ||||||
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CASH AND CASH EQUIVALENTS at end of period
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$ | 1,173 | $ | 6,974 | ||||
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Supplemental disclosure of cash flow information
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Cash paid for:
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Interest
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$ | - | $ | - | ||||
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Income Taxes
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$ | - | $ | - | ||||
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Supplemental schedule of non-cash investing and financing activities
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Reclassification of derivative liability to stockholders' equity
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$ | - | $ | 24,186 | ||||
See accompanying condensed notes to interim financial statements.
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
Note 1. The Company History and Nature of Business
Ontarget360 Group Inc (the “Company”), formed on December 4, 2009, is an Internet marketing agency that provides people, processes and tools to help clients improve the results generated by their marketing efforts The services include both internet market optimization and website implementation services, including website design and technology support including point of purchase capabilities and driving website traffic.
The financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. Since inception, the Company has incurred net losses of $260,476 and has a working capital deficiency of $152,205 at June 30, 2013. Our ability to continue as a going concern is dependent upon achieving sales growth, reduction of operation expenses and ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.
We need to either borrow funds from our majority shareholder or raise additional capital through equity or debt financings. We expect our current majority shareholder will be willing and able to provide such additional capital. However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest audited financial statements. The audited financial statements for the year ended September 30, 2012 are included in the Company’s Annual Report on Form 10-K, filed with the SEC on January 10, 2013.
Note 2. Summary of Significant Accounting Policies
Use of Estimates
The financial statements of the Company have been prepared using accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from those estimates.
Accounts Receivable
The Company’s accounts receivable are derived from direct customers. Collateral is not required for accounts receivable. The Company maintains an allowance for potential credit losses as considered necessary. At June 30, 2013, the allowance for potential credit losses was $0. The Company performs ongoing reviews of all customers that have breached their payment terms or for whom information has become available indicating a risk of non-recoverability. Payment terms are immediately upon receipt of invoice. The Company records an allowance for bad debts for specific customers identified as well as an allowance based on its historical collection experience. The Company’s evaluation of the allowance for potential credit losses requires the use of estimates and the actual results may differ from these estimates.
Revenue Recognition
The Company derives its revenue from the sale of marketing consulting services through both recurring subscription based arrangements and custom consulting projects. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers. Where applicable, the Company will also look to include performance-based compensation upside in its agreements whereby the Company will share in customer’s incremental increases in revenue (“Revenue Sharing Arrangements”). As of June 30, 2013, the Company has not established any Revenue Sharing Arrangements.
Marketing consulting service revenues
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104 Revenue Recognition. The Company recognizes revenue when all of the following conditions are met:
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there is persuasive evidence of an arrangement;
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the service has been provided to the customer;
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the collection of the fees is reasonably assured; and
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the amount of fees to be paid by the customer is fixed or determinable.
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Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses and income tax payable approximate their fair values due to the short-term maturities of these financial instruments.
Earnings per share
Earnings per share, in accordance with the provisions of ASC 260-10, Earnings Per Share, is computed by dividing net income by the weighted average number of common stock shares outstanding during the period. Potentially dilutive securities at June 30, 2013 consist of 82,500 common stock purchase warrants. A separate computation of diluted earnings per share is not presented as its effect would have been anti-dilutive.
Recent Accounting Requirements
Management does not believe that any recently issued, but not currently effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Note 3. Promissory Notes
On December 30, 2011, the Company entered into a promissory note agreement with a shareholder in the amount of $6,000. On January 9, 2012 and February 8, 2012 the Company entered into promissory note agreements with the same shareholder in the amounts of $3,000 and $7,500, respectively (all collectively, the “Notes”).
On May 18, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $10,000.
On July 21, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $7,500.
On September 6, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $7,500.
On October 2, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $25,000.
On October 4, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $10,000.
On November 7, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $10,000.
On November 21, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $5,000.
On December 6, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $30,000.
The Notes have a 12% interest rate and, unless paid off by the Company in advance, mature one year from issuance (“Maturity”). Interest is payable six months from issuance date and then at Maturity. The Notes have no prepayment penalty. For the nine months ended June 30, 2013 and 2012, the Company recorded interest expense of $11,248 and $1,000, respectively. On January 5, 2013, the note holder waived the events of default until the sooner of a change in control of the company or September 29, 2013.
Note 4. Stockholders’ Equity
Common Stock
The Company is authorized to issue up to 10,000,000 shares of common stock and 5,000,000 shares of preferred stock both with par value of $0.001. The Company had 3,454,520 shares of common stock issued and outstanding as of June 30, 2013 and September 30, 2012
Note 5. Commitments and Contingencies
Through a perpetual licensing agreement with FN Implementation and Financing Partners, Inc (“FNIFP”) (the “Licensing Agreement”) dated as of December 31, 2009, the Company was granted full access and use to the proprietary reporting methodology to AccountMETRICing Architecture™(“AAI”). AAI is a reporting system that is built on the specific needs of clients to understand and manage key performance indicators related to their business. Under the Licensing Agreement the Company will payout a 5% royalty on all clients that specifically utilize the reporting methodology along with the other services provided by the Company. No royalty fees have been earned from inception through June 30, 2013.
Other than the royalties to be paid under the perpetual licensing arrangement the Company has no leases or other written contractual agreements.
Note 6. Related Party Transaction and Arrangements
FN Implementation & Financing Partners, Inc. (“FNIFP”)
Pursuant to a consulting agreement (the “Consulting Agreement”) dated December 15, 2009, the Company entered into an arrangement with FNIFP to provide certain general accounting, finance, legal and client advisory and delivery assistance. The amounts of payment vary according to services provided. For the nine months ended June 30, 2013 and 2012 the Company recorded $3,000 and $31,000, respectively for these various services. At June 30, 2013 the Company did not owe any money to FNIFP for these services. For the nine months ended June 30, 2013 and 2012 $0 and $11,000 of FNIFP’s fees has been allocated to cost of revenue and $3,000 and $20,000 has been allocated to General and administrative expenses, respectively
We have also entered into our Perpetual Licensing Agreement with FNIFP. As of June 30, 2013 no royalties under the licensing agreement have been paid.
Cobble Hill Interactive LLC (“CHI”)
Pursuant to a consulting agreement (the “Consulting Agreement”) dated January 1, 2012, the Company entered into an arrangement with CHI to provide certain client services and contractor management. CHI is an entity owned by the Company’s Chief Executive and Financial Officer. For the nine months ended June 30, 2013 and 2012 the Company recorded $3,000 and $12,000 respectively for these various services. For the nine months ended June 30, 2013 and 2012, $3,000 and $5,000 have been allocated to general and administrative expenses, respectively and $0 and $7,000 have been allocated to cost of goods sold, respectively. At June 30, 2013 the Company did not owe any money to CHI for these services.
Note 7. Subsequent Events
On July 19, 2013, Xpress Group, Ltd., a Hong Kong company ("Xpress") purchased an aggregate of 3,279,520 shares (the "Shares") of Ontarget360 Group, Inc.'s (the "Company") common stock representing approximately 94.9% of its issued and outstanding common stock, representing a change in control of the Company. As part of the agreement, the majority shareholder forgave all promissory notes listed in Note 3 above. The aggregate amount of the promissory notes forgiven by the majority shareholder was $121,500 plus accrued interest of $13,311.
As part of the purchase by Xpress, all holders of convertible warrants to purchase common shares of the Company agreed to cancel their warrants. As of July 19, 2013, there are no outstanding convertible warrants to purchase any securities of the Company.
Xpress used funds from its working capital to acquire the Shares.
On July 19, 2013 the Company's board of directors appointed Conn Flanigan as its Chief Executive Officer, Chief Financial Officer and a director to hold office until the next annual meeting of shareholders and until his successor is duly elected and qualified or until his resignation or removal. The Company has not entered into any compensation arrangements with Mr. Flanigan.
Following the appointment of Mr. Flanigan as an officer and director of the Company, Howard Kaplan resigned his position as our Chief Executive Officer, Chief Financial Officer and Director effective as of July 19, 2013.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
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1.
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our future operating results;
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our business prospects;
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3.
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any contractual arrangements and relationships with third parties;
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4.
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the dependence of our future success on the general economy;
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5.
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any possible financings; and
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6.
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the adequacy of our cash resources and working capital.
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These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
General and Trends in the Industry
It's easy to see why business owners & stakeholders love the web. Yesterday's brick & mortar storefronts, with their high costs, are replaced today with just-in-time inventory & a target market anywhere UPS ships. Reaching a mass market, once needing a Fortune 500 ad budget, is now accessible on a performance basis replacing the wasted ad dollar with a more effective one. But more than just putting downward pressure on costs, and expanding reach to customers is the simple fact that the web is where the customer shops & buys… and buy they do, to the tune of 1/2 a trillion dollars annually. Business owners chasing this revenue quickly realize there are people & tools out there to help a lot of them, and new capabilities coming to the market every day. These service providers lick their chops thinking of all the businesses out there spending billions of dollars annually on advertising, and even billions more supporting those ad buys.
In a 2012 Borrell Associate Report it is estimated that Small Businesses will spend $390 billion on interactive marketing services and supporting technology in 2012. On top of that, according to a 2012 Forrester research report, $35 billion was spent on interactive marketing advertising. That amount is forecast to grow to over $76 billion by 2016 - a 17% compounded annual growth rate. The US census bureau estimates that there are 30 million small and mid-size enterprises (“SMBs”) in the United States, and that market is forecasted to grow by 6 million new SMB’s annually.
Our focus is on the SMB market that need to generate more revenue and for whom the Internet sales channel has been underutilized to date. The key to success online is more than just figuring out what online tactics to engage in & which tools to use, it's also what order to engage each effort, and who can be a trusted advisor in executing a digital marketing plan that drives results. What a business owner needs is symphony conductor, capable of being evaluated on the sum of the parts, not the individual pieces. A truly trusted advisor puts their money where their mouth is, and works with clients within their defined marketing budget, getting paid for driving growth, not simply spending marketing dollars. This is a new breed of digital marketing agency, and the model for our services.
Through our proprietary, vendor and technology agnostic decision support system we deliver a unified interactive marketing solution. We refer to the comprehensive approach as the Ontarget360 Implementation+ Program (the “Program”). The Program offers businesses a single point of entry to an array of effective, affordable online services that will help drive their business. The breadth and flexibility of our offering should allow us to address the interactive marketing needs of a wide variety of customers. Our longer-term objective is to become an application service provider, or ASP, therefore we plan to offer our customers an all-inclusive offering on an affordable subscription basis with simple and predictable pricing levels.
Results of Operations
Summary of Key Results
For the unaudited three months ending June 30, 2013 and 2012
Revenues and Cost of Revenues
Total revenue for the three months ended June 30, 2013 and 2012, was $7,500 and $37,167, respectively, representing a decrease of $29,667 or 79.8%. The decrease was due to the loss of two clients.
Cost of revenues for the three months ended June 30, 2013 and 2012, was $3,315 and $19,884, respectively, representing a decrease of $16,569 or 83.3%. The decrease was primarily due to a reduction of independent contractor work related to the decreases in revenue. Gross profit as a percentage of total revenue for the three months ended June 30, 2013 and 2012, was 55.8%, and 46.5%, respectively, representing an increase of 9.3%. The increase was primarily due to reduced contract labor costs in delivering client services.
Operating Expenses
Total operating expenses for the three months ended June 30, 2013 and 2012, were $13,967 and $57,398 respectively, representing an decrease of $43,431 or 75.7%. The decrease was primarily due to decreased professional fees and related party costs.
Other Expenses (Income)
Total other expenses (income) for the three months ended June 30, 2013 and 2012, were $3,598 and $(118), respectively. The increase was due to increased interest expense from shareholder loans.
For the unaudited nine months ending June 30, 2013 and 2012
Revenues and Cost of Revenues
Total revenue for the nine months ended June 30, 2013 and 2012, was $47,000 and $62,817, respectively, representing a decrease of $15,817 or 25.2%. The decrease was due to the loss of two clients.
Cost of revenues for the nine months ended June 30, 2013 and 2012, was $27,298 and $30,409, respectively, representing a decrease of $3,111 or 10.2%. The decrease was primarily due to reduced independent contractor work on engagements related to decreases in revenue. Gross profit as a percentage of total revenue for the nine months ended June 30, 2013 and 2012, was 41.9%, and 51.6%, respectively, representing and decrease of 9.7%. The decrease was primarily due to additional contract labor costs in delivering client services, offset by a reduction in related party costs.
Operating Expenses
Total operating expenses for the nine months ended June 30, 2013 and 2012, were $94,420 and $90,411 respectively, representing an increase of $4,009 or 4.4%. The increase was primarily due to increased professional fees.
Other Expenses
Total other expenses for the nine months ended June 30, 2013 and 2012, were $11,248 and $245, respectively. The increase was due to increased interest expense from shareholder loans.
Liquidity and Capital Resources
At June 30, 2012, we had cash of $1,173 and a working capital deficit of $152,205. Since inception, we have raised $108,271 in equity capital and $121,500 in debt.
We had a total stockholders’ deficit of $152,205 and an accumulated deficit of $260,476 as of June 30, 2013.
We had $81,850 in net cash used in operating activities for the nine months ended June 30, 2013, which included $85,986 in net loss. Cash flows used in operating activities included changes in operating assets and liabilities totaling $4,136.
We had $80,000 of net cash provided by financing activities for the nine months ended, which was a loan from a shareholder.
As of June 30, 2013, we did not have any fixed operating expenses. However, over the next twelve months we expect to hire employees both to deliver our services as well as perform other administrative and operating activities. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, we would need to either borrow funds from our officers or raise additional capital through equity or debt financings. We expect Xpress will be willing and able to provide such additional capital. However, we cannot be certain that such capital (from our officers or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial and operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis.
With respect to shares issued for services, our board of directors determines the value of the services provided and authorizes the issuance of shares based upon the fair market value of our shares.
Off-Balance Sheet Arrangements
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Critical Accounting Policies
Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts, inventory reserves and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Revenue Recognition
The Company derives its revenue from the sale of marketing consulting services through both recurring subscription based arrangements and custom consulting projects. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers. Where applicable, the Company will also look to include performance-based compensation upside in its agreements whereby the Company will share in customer’s incremental increases in revenue (“Revenue Sharing Arrangements”). As of June 30, 2013, the Company has not established any Revenue Sharing Arrangements.
Marketing consulting service revenues
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition The Company recognizes revenue when all of the following conditions are met:
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there is persuasive evidence of an arrangement;
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the service has been provided to the customer;
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the collection of the fees is reasonably assured; and
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the amount of fees to be paid by the customer is fixed or determinable.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K
ITEM 4. CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company.
(a) Evaluation of Disclosure Controls and Procedures
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are not effective to ensure that information required to be disclosed by us in report that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SECs”) rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in the Company’s Internal Controls Over Financial Reporting
Other than described above, there have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 5. OTHER
None
We are not a party to any legal proceedings. Management is not aware of any legal proceedings proposed to be initiated against us. However, from time to time, we may become subject to claims and litigation generally associated with any business venture operating in the ordinary course.
Not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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Exhibit Number
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Description
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31.1*
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Rule 13a-14(a) Certification of the Chief Executive and Financial Officer
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32.1*
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Section 1350 Certification of Chief Executive and Financial Officer
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101.INS**
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XBRL Instance Document
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101.SCH**
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XBRL Taxonomy Extension Schema
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101.CAL**
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XBRL Taxonomy Extension Calculation
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101.DEF**
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XBRL Taxonomy Extension Definition
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101.LAB**
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XBRL Taxonomy Extension Labels
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101.PRE**
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XBRL Taxonomy Extension Presentation Linkbase
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*
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Filed Herewith
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XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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ONTARGET 360 GROUP INC
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Dated: August 14, 2013
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By:
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/s/ Conn Flanigan
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Conn Flanigan
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Chief Executive Officer, (principal executive officer)
and Chief Accounting Officer (principal financial accounting officer)
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