U.S. SECURITIES AND EXCHANGE COMMISSION

 

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended December 31, 2014
☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ____________to____________

 

Commission file number 333-192415

 

OURNETT HOLDINGS, INC.

 

(Exact name of small business issuer as specified in its charter)

 

Nevada		333-192415		46-3545939
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

122 East 42nd Street

New York, New York 10168 

 (Address of principal executive offices) (Zip code)

 

Issuer’s telephone number: 212-986-1544

 

None

Securities registered under Section 12(g) of the Exchange Act:

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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  ☐     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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☐     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 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	☒

  

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

 

There were 43,662,440 shares outstanding of registrant’s common stock, par value $.00001 per share, as of April 15, 2015.

 

Prepared By:

 

 

Sunny J. Barkats, Esq.

JSBarkats, PLLC

18 East 41^st Street, 14^th Floor

New York, NY 10017

P: (646) 502-7001

F: (646) 607-5544

www.JSBarkats.com

 

 

OURNETT HOLDINGS, INC.

 

TABLE OF CONTENTS

 

PART I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of December 31, 2014 and September 30, 2013 (unaudited)	1
	Condensed Consolidated Statements of Operations for the Three Months Ended December 31, 2014 and December 31, 2013 (unaudited)	2
	Condensed Consolidated Statements of Changes in Stockholders Equity (Deficit) for the Three Months Ended December 31, 2014 (unaudited)	3
	Condensed Consolidated Statement of Cash Flows for the Three Months Ended December 31, 2014 and December 31, 2013 (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15
Item 4.	Controls and Procedures	15
PART II.	Other Information	16
Item 1.	Legal Proceedings.	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	16
Item 3.	Default upon Senior Securities.	16
Item 4.	Mine Safety Disclosures.	16
Item 5.	Other Information.	16
Item 6.	Exhibits.	17
	Signatures	18

 

 

Ournett Holdings, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

ASSETS

		December 31, 2014 (Unaudited)				September 30, 2014
Current Assets
Cash		$	448			$	2,515
Total Assets		$	448			$	2,515
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Long Term Liabilities
Accounts payable		$	89,718			$	68,429
Accounts payable - related party			28,000				19,000
Accrued interest			1,084				735
Accrued interest - related party			89				45
Note payable			141,521				141,521
Note payable - related party			11,896				11,896
Total Liabilities			272,308				241,626
Commitments and Contingencies			—				—
Stockholders’ Equity (Deficit)
Preferred stock, $0.00001 par value; 10,000,000 shares authorized, none issued and outstanding			—				—
Common stock, $0.00001 par value; 100,000,000 shares authorized, 42,062,440 and 41,062,440 issued and outstanding December 31, 2014 and September 30, 2014, respectively			421				411
Treasury stock, 1,000,000 shares			(20,000	)			(20,000	)
Additional paid-in capital			181,080				152,871
Stock payable			12,500				25,000
Accumulated Deficit			(445,861	)			(397,393	)
Total Stockholders’ Equity(Deficit)			(271,860	)			(239,111	)
Total Liabilities and Stockholders’ Equity(Deficit)		$	448			$	2,515

 See accompanying notes to unaudited condensed consolidated financial statements 

 

 

Ournett Holdings, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)

 

		Three Months Ended				Three Months Ended
		December 31, 2014				December 31, 2013
Revenue		$	—			$	—
Cost of Revenue			—				—
Gross Profit			—				—
Operating Expenses
General and Administrative			48,856				77,407
Total Operating Expenses			48,856				77,407
Loss from Operations			(44,856	)			(77,407	)
Other Expenses
Interest Expense, net			(3,612	)			(155	)
LOSS FROM OPERATIONS BEFORE INCOME TAXES			(48,468	)			(77,562	)
Provision for Income Taxes			—				—
NET LOSS		$	(48,468	)		$	(77,562	)
Net Loss Per Share - Basic and Diluted		$	(0.00	)		$	(0.00	)
Weighted average number of shares outstanding during the period - Basic and Diluted			42,562,440				39,146,500

  

See accompanying notes to condensed unaudited consolidated financial statements

 

 

Ournett Holdings, Inc. and Subsidiary

Condensed Consolidated Statement of Stockholders' Equity (Deficit)

For the three months ended December 31, 2014

(Unaudited)

 

		Preferred Stock								Common Stock
		Shares				Amount				Shares				Amount				Additional paid-in capital				Accumulated Deficit				Stock payable				Treasury Stock				Total Stockholders' Equity(Deficit)
Balance, September 30, 2014			—			$	—				41,062,440			$	411			$	152,871			$	(397,393	)		$	25,000			$	(20,000	)		$	(239,111	)
Common stock issued for cash ($0.025/ per share)			—				—				—				—				—				—				12,500				—				12,500
Common stock issued for services ($0.025/ per share)			—				—				1,000,000				10				24,990				—				(25,000	)			—				—
In kind contribution of interest on the related party loans			—				—				—				—				248				—				—				—				248
In kind contribution of interest on the loans			—				—				—				—				2,971				—				—				—				2,971
Net loss, for the three months ended December 31, 2014			—				—				—				—				—				(48,468	)			—				—				(48,468	)
Balance December 31, 2014			—				—				42,062,440				421				181,080				(445,861	)			12,500				(20,000	)			(271,860	)

  

See accompanying notes to condensed unaudited consolidated financial statements 

 

 

Ournett Holdings, Inc. and Subsidiary

 Condensed Consolidated Statement of Cash Flows

(Unaudited)

  

		For The Three Months				For The Three Months
		December 31, 2014				December 31, 2013
Cash Flows Used In Operating Activities:
Net Loss		$	(48,468	)		$	(77,562	)
Adjustments to reconcile net loss to net cash used in operations
In-kind contribution of interest			3,219				—
Changes in operating assets and liabilities:
Increase in accounts payable			21,289				15,596
Increase in accrued expenses			349				155
Increase n accrued expenses - related party			9,044				—
Increase/(Decrease) in prepaid expenses			—				3,000
Net Cash Used In Operating Activities			(14,567	)			(58,811	)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock			12,500				—
Cash collected from subscription receivable			—				241
Net Cash Provided by Financing Activities			12,500				241
Net (Decrease)/Increase in Cash			(2,067	)			(58,570	)
Cash at Beginning of Year/Period			2,515				87,071
Cash at End of Year/Period		$	448			$	28,501
Supplemental disclosure of cash flow information:
Cash paid for interest		$	—			$	—
Cash paid for taxes		$	—			$	—
Supplemental disclosure of non-cash investing and financing activities:
Stock issued from stock payable		$	25,000			$	—

 

See accompanying notes to condensed unaudited consolidated financial statements

 

 

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED)

  

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION 

 

(A) Organization

 

Ournett Holdings, Inc. was incorporated under the laws of the State of Nevada on August 26, 2013. Ournett, Inc., a wholly owned subsidiary, was incorporated under the laws of the State of New York also on August 26, 2013. Collectively, Ournett Holdings, Inc. and Ournett, Inc. make up the consolidated company (the “Company”) as of August 26, 2013 (date of Inception).

 

The Company was formed to develop a local e-commerce marketplace that connects merchants to consumers through its bloggers by offering goods and services at a discount.

 

The Company’s success will depend on continued employment of the existing executive officers and directors for the development of the Company’s platform. Such experience will be important to the establishment of the business. The loss of these individuals during this early development stage could disrupt and negatively affect the business and operations. The success also depends on having highly trained technical and customer support personnel.

 

(B) Basis of Presentation

 

The accompanying unaudited condensed financial statements of the Company, have been prepared in accordance with the rules and regulations (S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results from operations for the three months ended December 31, 2014 are not necessarily indicative of the results that may be expected for the year ended September 30, 2015. The unaudited condensed financial statements should be read in conjunction with the September 30, 2014 financial statements and footnotes thereto included in the Company’s Registration Statement included in Form 10k filed on March 31, 2015.

  

(C) Going Concern

 

The activities of the Company have been principally devoted to developing the business plan and raising capital. The Company has not generated any revenue, has incurred expenses and has sustained losses to date. Consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. As reflected in the accompanying condensed financial statements for the three months ended December 31, 2014, the Company used cash in operations of $14,567 and has a net loss of $48,468. These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.

 

The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

 

(C) Principles of Consolidation

 

The accompanying 2014 consolidated financial statements include the accounts of Ournett Holdings, Inc. and its wholly owned subsidiary, Ournett, Inc. All intercompany accounts have been eliminated upon consolidation.

 

(D) Use of Estimates

 

In preparing the consolidated financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. Significant estimates include valuation of deferred tax assets. Actual results could differ from those estimates.

 

 

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED)

  

(E) Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2014 and September 30, 2014, respectively, the Company had no cash equivalents.

 

(F) Loss Per Share

 

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by the Financial Accounting Standards Board (FASB) ASC No. 260, “Earnings Per Share.” As of December 31, 2014 and 2013 there were no common share equivalents outstanding.

 

(G) Income Taxes

 

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

  

(H) Business Segments

 

The Company operates in one segment and therefore segment information is not presented.

 

(I) Revenue Recognition

 

The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

 

(J) Recent Accounting Pronouncements

 

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The Company has elected early adoption of these amendments.

 

 

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED)

 

In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation - Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with

 

performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

  

In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

(K) Reclassification

 

We have reclassified certain prior period amounts to conform to the current period presentation. These reclassifications have no effect on the financial position or on the results of operations or cash flows for the periods presented.

 

(L) Fair Value of Financial Instruments

 

We hold certain financial assets, which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Level 1 instruments include cash, account receivable, prepaid expenses, inventory and account payable and accrued liabilities. The carrying values are assumed to approximate the fair value due to the short term nature of the instrument.

 

The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

 

 

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED)

 

	●	Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe our carrying value of level 1 instruments approximate their fair value at December 31, 2014 and September 30, 2014.
	●	Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
	●	Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider depleting assets, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including NYMEX price quotations and contract terms.

 

					December 31, 2014				September 30, 2014
	Level 1				—				—
	Level 2				—				—
	Level 3				—				—
	Total				—				—

 

NOTE 2   NOTES PAYABLE - RELATED PARTY

 

On June 3, 2014 the Company executed an unsecured, interest bearing promissory note, due on June 3, 2024 promissory note payable to its stockholder in the amount of $10,000. Pursuant to the terms of the note, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014 and September 30, 2014, the Company accrued interest in the amount of $50 and 25, respectively, and recorded $495 as an in kind contribution of interest.

 

On September 19, 2013 the Company executed an unsecured, interest bearing promissory note, due on September 18, 2023, payable to its stockholder in the amount of $1,896. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014 and September 30, 2014, the Company accrued interest in the amount of $24and $20, respectively, and recorded $41, as an in kind contribution of interest (See Note 5).

 

NOTE 3    NOTES PAYABLE

 

On September 8, 2014 the Company executed an unsecured, interest bearing promissory note, due on August 4, 2024 promissory note payable to an unrelated party in the amount of $50,000 . Pursuant to the terms of the note, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date. The holder of the note has an option to convert the note into 2,000,000 shares of the Company’s common stock. For the year ended September 30, 2014, the loan balance remains outstanding. As of December 31, 2014, the Company accrued interest in the amount of $155 and recorded $1,012, as an in-kind contribution of interest. For convertible debt, the convertible feature indicated a rate of conversion that was not below market value. As a result, the Company did not record a “beneficial conversion feature” (“BCF”) and related debt discount.

 

On August 4, 2014 the Company executed an unsecured, interest bearing promissory note, due on August 4, 2024 promissory note payable to an unrelated party in the amount of $25,000 . Pursuant to the terms of the note, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date. The holder of the note has an option to convert the note into 1,000,000 shares of the Company’s common stock. For the year ended September 30, 2014, the loan balance remains outstanding. As of December 31, 2014, the Company accrued interest in the amount of $102 and recorded $510, as an in-kind contribution of interest. For convertible debt, the convertible feature indicated a rate of conversion that was not below market value. As a result, the Company did not record a “beneficial conversion feature” (“BCF”) and related debt discount.

 

  

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED)

 

On September 19, 2013 the Company executed an unsecured, interest bearing promissory note, due on September 18, 2023, payable to its stockholder in the amount of $23,024. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014 and 2013, the Company accrued interest in the amount of $296 and $65, respectively, and recorded $503, as an in-kind contribution of interest.

 

On September 19, 2013 the Company executed an unsecured, interest bearing promissory note, due on September 18, 2023, payable to its stockholder in the amount of $24,980. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date. On March 6, 2014 the Company executed an unsecured, interest bearing promissory note, due on March 6, 2024, payable to the same stockholder in the amount of $6,425. Pursuant to the terms of these notes, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014, the Company accrued interest for both notes in the amount of $374 and record $681 as in-kind contribution of interest. As of September 30, 2013, the Company accrued interest on one of the notes in the amount of $70.

 

On September 19, 2013 the Company executed an unsecured, interest bearing promissory note, due on September 18, 2023, payable to its stockholder in the amount of $12,092. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014 and 2013, the Company accrued interest in the amount of $155 and $34, respectively, and recorded $264, as an in-kind contribution of interest.

 

NOTE 4  STOCKHOLDERS’ EQUITY

  

(A) Common Stock Issued for Cash

 

On November 3, 2014, the Company entered into a subscription agreement for the purchase of 500,000 shares at $0.025/share for cash at fair value of $12,500. The purchase price of $12,500 has been received by the Company, however, the investor agreed orally to defer the receipt of the shares purchased until after the Company receives its ticker symbol from FINRA.

 

For the year ended September 30, 2014, the Company issued 1,178,440 shares of its common stock at a purchase price of $0.025 per share, which were valued at $29,461. The Company also issued 287,500 shares of its common stock at a purchase price of $0.014 per share, which were valued at $4,025.

 

(B) Stock Issued for Services and Interest

 

For the year ended September 30, 2014, the Company issued 450,000 shares of common stock in exchange for consulting services valued at $6,300 ($0.014/share) based upon the recent third party cash offering price, representing the best evidence of fair value.

 

On September 17, 2014 the Company issued 1,000,000 shares of common shares in exchange for legal services valued at $25,000 ($0.025/share), based upon the recent third party cash offering price, representing the best evidence of fair value. The shares were validly authorized for issuance, however, the stock transfer agent issued the shares on October 31, 2014. (See Note 6)

 

For the three months ended December 31, 2014, the Company recorded $3,219 as an in kind contribution of interest.

 

For the year ended September 30, 2014, the Company recorded $5,312 as an in kind contribution of interest.

 

(C) Preferred Stock

 

The Company was incorporated on August 26, 2013. The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.00001 per share. Preferred stock may be issued in one or more series. As of September 30, 2014, no preferred shares are issued and outstanding. Rights and preferences are to be determined by the board of directors.

 

 

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED) 

 

NOTE 5   RELATED PARTY TRANSACTIONS

  

On June 3, 2014 the Company executed an unsecured, interest bearing promissory note, due on June 3, 2024 promissory note payable to its stockholder in the amount of $10,000. Pursuant to the terms of the note, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014, the Company accrued interest in the amount of $65 and recorded $207, as an in kind contribution of interest.

 

On September 19, 2013 the Company executed an unsecured, interest bearing promissory note, due on September 18, 2023, payable to one of its stockholder in the amount of $1,896. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date. As of December 31, 2014 and 2013, the Company accrued interest in the amount of $24 and $5, respectively, and recorded $41 as an in kind contribution of interest. (See Note 2).

 

On September 22, 2014 Miguel Sebastia, the Company’s officer and Director resigned. For the services rendered the director will receive the following compensation:

	—	Immediate payment upon execution of this Agreement in the amount of $20,000. Simultaneously, Director shall return his 4,500,000 shares for no consideration. On February 9, 2015, Mr. Sebastia returned 1,000,000 shares to the Company (See Note 7).
	—	Payment in the amount of $70,000 within three months of the date of execution of this Agreement
	—	In the event the Company does not timely pay the Director the $70,000 balance due, then 3,500,000 of the shares he owns shall be returned.

 

For the year ended September 30, 214 the Company paid $20,000 to Mr. Sebastia. On February 9, 2014 the Company amended the agreement and agreed to pay Mr. Sebastia a total $90,000 in exchange for 4,500,000 shares of its common stock by December 22, 2014 of which $20,000 was previously paid. However, since no additional payment was made to Mr. Sebastia, he will keep the 3,500,000 in stock and the Company has until March 24, 2015 to pay the $70,000 for his 3,500,000 shares. The Company recorded $20,000 as a repurchase of treasury stock.

 

Our executive, administrative, and operating offices are located at 122 East 42nd Street, Suite 620, New York, New York 10168. We lease this space from Fernando Koatz, the President, director, and shareholder at no cost.

 

NOTE 6   COMMITMENTS

  

On September 17, 2014, the Company entered into a consulting agreement to receive professional services. The Company is required to pay $2,800 per month and issue 1,000,000 shares upon the execution of the agreement. In addition, the Company will pay a fee of $15,000 for additional professional fees of which $5,000 is due upon the execution of the agreement and $10,000 payable on a monthly basis at $2,000 per month starting October 1, 2014. Additionally, on the first anniversary date of the agreement an additional 1,000,000 shares will be issued. Upon issuance shares are fully vested and non-forfeitable. For the year ended September 30, 2014, the Company’s issued 1,000,000 shares in exchange for professional services valued at $25,000 ($0.025/share), based upon the recent third party cash offering price, representing the best evidence of fair value. The shares were validly authorized for issuance, however, the stock transfer agent issued the shares on October 31, 2014. On February 16, 2015 the Company entered into an addendum to the original agreement and will issue an additional 1,500,000 shares and $15,000 (See Note 7).

 

NOTE 7   SUBSEQUENT EVENTS

  

On February 26, 2015, the Company issued 50,000 shares of common stock in exchange for consulting services valued at $125 ($0.025/share) based upon the recent third party cash offering price, representing the best evidence of fair value.

 

On February 26, 2015, the Company issued 50,000 shares of common stock in exchange for accounts payable valued at $125 ($0.025/share) based upon the recent third party cash offering price, representing the best evidence of fair value.

 

 

OURNETT HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014

(UNAUDITED) 

 

On February 16, 2015, the Company issued 1,500,000 shares of common stock in exchange for processional services valued at $37,500 ($0.025/share) based upon the recent third party cash offering price, representing the best evidence of fair value. (See Note 6).

 

On March 12, 2015, the Company issued a convertible note in the principal amount of $25,000 to an investor. This convertible note matures on March 11, 2025. Starting September 9, 2015, and provide the Company’s common stock is eligible for quotation on the OTC QB Market or the OTC Pink, this convertible note may be converted into shares of the Company’s common stock at a conversion price of $0.05. For convertible debt, the convertible feature indicated a rate of conversion that was not below market value. As a result, the Company did not record a “beneficial conversion feature” (“BCF”) and related debt discount. In connection with the note, the Company entered into a compensation agreement, where the Company will issue 2,000,000 shares of common stock to a consultant as a finder’s fee compensation service valued at $50,000 ($0.025/share) based upon the recent third party cash offering price, representing the best evidence of fair value.

 

 

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

 

The following discussion and analysis summarizes the significant factors affecting our condensed consolidated results of operations, financial condition and liquidity position for the three and nine months ended June 30, 2014. This discussion and analysis should be read in conjunction with our audited financial statements and notes for the period from August 26, 2013 (inception) through June 30, 2014 thereto included in our recently filed Form S-1 Registration Statement and the condensed consolidated unaudited financial statements and related notes included elsewhere in this filing. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

 

Forward Looking Statements

 

Some of the statements contained in this prospectus that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this prospectus, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

 

●	Our ability to attract and retain management;
●	Our ability to raise capital when needed and on acceptable terms and conditions;
●	The intensity of competition; and
●	General economic conditions.

 

All written and oral forward-looking statements made in connection with this prospectus that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

 

Plan of Operation

 

To date, we have been focused on forming our company and other administrative matters in addition to developing our website and negotiating agreements with merchants and marketing partners or bloggers. In addition, we have also begun our evaluation of outside web designs, software developers and other service providers.

 

From August 2013 through the date hereof, we have incurred approximately $49,650 in expenses associated with the development of our ecommerce solution representing approximately 3,500 work hours. We have a team divided into three departments ((i) Management and Design, (ii) Development and (iii) Computer Programming) and a multidisciplinary group has worked to develop the design, the applications, the software and server. The work that has been done to date has been in connection with design of the website, the backend solution, the development of APPS and development of 3D APPS.

 

With respect to the web architecture, we have elected to not utilize open sources but have instead elected to develop the web architecture from the ground up providing us with additional security.

 

The applications that have been developed are available for IOS and are being adapted for Android platforms. These include geolocator for businesses, shows and events, amusement games for children and travel notebooks.

 

Ournett has also negotiated with Best Buy and Softlayer to handle purchases for future bloggers and users. We have also engaged a musician and artist.

 

 

Our specific goal is to:

 

-	continue to engage consultants for the design and development of our web site and e-commerce platform; and
-	negotiate and finalize agreements with bloggers to assist in the marketing and advertising of our e-commerce marketplace.

 

Until our website is fully operational, our network infrastructure and transaction processing systems are in place we will not be able to provide our services. We believe that we will have to spend approximately $10,000 in order to ensure that our website is fully operational and our network infrastructure and transaction processing systems are in place. We expect that our website will be fully functional no later than August 31, 2015. While developing our website, we expect to concurrently finalize our agreements with our bloggers. If we are unable to negotiate suitable terms with service providers to develop and maintain our website and software and to attract customers to our website, we may have to suspend or cease operations.

 

If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations. If we cease operations, we do not know what we will do and we do not have any plans to do anything else. Once the website goes live, we expect that we will need to spend at minimum $25,000 per year to maintain our website. Further, following the effective date of this prospectus, we will be a reporting company and in order to comply with such reporting requirements, we will incur additional administrative expenses including substantial legal and accounting expenses. We expect such fees to be approximately $75,000 per year. As a result of our expected expenses, we will be required to raise additional debt or equity financing of which there is no guarantee that such financing will be available or available on acceptable terms. 

 

Limited Operating History; Need for Additional Capital

 

There is no historical financial information about us upon which to base an evaluation of our performance. We are in development stage operations and have not generated any revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns.

 

To become profitable and competitive, we have to develop our website, network infrastructure, and transaction processing systems; and secure third parties to create the website, services and software to be offered on our website. We are seeking equity financing to provide for the capital required to implement our operations. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

 

Results of Operations

 

For the three months ended December 31, 2014, the Company incurred net losses from operations in the amount of $48,468, compared to net loss of $77,562 for the same period in 2013, and the Company has an accumulated deficit in the amount of $445,861 for the period from Inception to December 31, 2014. For the three months ended December 31, 2014, the Company incurred general and administrative expenses in the amount of $44,856 compared to $77,407 for the same period in 2013. We anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributed to costs associated with setting up and maintaining our website, and the professional fees to be incurred in connection with the filing of a registration statement with the Securities Exchange Commission under the Securities Act of 1933. We anticipate our ongoing operating expenses will also increase once we become a reporting company under the Securities Exchange Act of 1934.

 

Liquidity and Capital Resources

 

Our future capital requirements and the adequacy of available funds will depend on numerous factors, including the successful commercialization of our marketplace, competing technological and market developments, and the development of strategic alliances for the development and marketing of our products. Our company intends to try to obtain additional funds through equity or debt financing, strategic alliances with corporate partners and others, or through other sources.

 

As of December 31, 2014, we had $448 of cash on hand. We expect that we will be able to continue in operations until June 30, 2015 as a result of the of the proceeds we received on March 12, 2015 from the sale of a convertible note to an investor for a purchase price of $25,000.

 

 

On September 19, 2013, we executed an unsecured, non-interest note bearing, due on September 18, 2023 promissory note payable to Alfonso Lloret Garcia, a shareholder of our company, in the amount of $1,896. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date.

 

On September 19, 2013, we executed an unsecured, non-interest note bearing, due on September 18, 2023 promissory note payable to Acisclo Perez Moral, a shareholder of our company, in the amount of $23,024. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date.

 

On September 19, 2013, we executed an unsecured, non-interest note bearing, due on September 18, 2023 promissory note payable to Jose Corominas Soler, a shareholder of our company, in the amount of $24,980. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date.

 

On September 19, 2013, we executed an unsecured, non-interest note bearing, due on September 18, 2023 promissory note payable to Ruperto Serra Roldos, a shareholder of our company, in the amount of $12,092. Pursuant to the terms of the note, the loan is interest bearing at 1% per year, on the outstanding balance, due on the maturity date.

 

On March 6, 2014, a shareholder loaned our company $6,425 in consideration of a promissory note with a ten year term due and payable in March 2024 with interest that accrues at 1% per annum. In addition, during the quarter ended June 30, 2014, the shareholder purchased 287,500 shares of common stock at a per share purchase price of $0.014 for consideration of $4,025. The investor had a pre-existing relationship with the Company and had previously invested in the Company during the quarter ended September 30, 2013.

 

On June 3, 2014 the Company executed an unsecured, interest bearing note, due on June 3, 2024 promissory note payable to its stockholder in the amount of $10,000. Pursuant to the terms of the note, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date.

 

On August 4, 2014 the Company executed an unsecured, interest bearing, due on August 4, 2024 promissory note payable to an unrelated party in the amount of $25,000 . Pursuant to the terms of the note, the loans are interest bearing at 1% per year, on the outstanding balance, due on the maturity date.

 

As a result of the above financings, we have promissory notes outstanding in the aggregate principal amount of $103, 417 as of December 31, 2014.

 

In the event Ournett’s plans change or its assumptions change or prove to be inaccurate or the funds available prove to be insufficient to fund operations at the planned level (due to further unanticipated expenses, delays, problems or otherwise), Ournett could be required to obtain additional funds earlier than expected. Ournett does not have any committed sources of additional financing, and there can be no assurance that additional funding, if necessary, will be available on acceptable terms, if at all. If adequate funds are not available, we may be required to further delay, scale-back, or eliminate certain aspects of our operations or attempt to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates, products, or potential markets. If adequate funds are not available, Ournett ‘s business, financial condition, and results of operations will be materially and adversely affected.

 

Until required for operations, Ournett’s policy will be to invest its cash reserves in bank deposits. Ournett expects that its operating results will fluctuate significantly from quarter to quarter in the future and will depend on a number of factors, most of which are outside Ournett’s control.

  

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

 

Going Concern

 

As reflected in the accompanying condensed consolidated unaudited financial statements, the Company has no revenues, used cash in operations of $14,567 for the three month period ended December 31, 2014 from inception and has an accumulated deficit of $445,861 through December 31, 2014. This raises substantial doubt about its ability to continue as a going concern. Management has yet to decide what type of offering we will use or how much capital we will attempt to obtain. There is no guarantee that we will be able to raise any capital through any type of offerings.

 

Critical Accounting Policies

 

Our unaudited condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which 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.

 

The Company has adopted Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification™. Other than the elimination of the inception to date information, there were no other changes to the financial statements.

 

A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For example, many start-ups or even long-lived organizations that have not yet begun their principal operations or do not have significant revenue would be identified as development stage entities.

 

For public business entities, the presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted.

 

There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows

 

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU No. 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method or determined the effect of the standard on our ongoing financial reporting. 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

 

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item. 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the year covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of 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. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of the end of the applicable period to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

 

 

As a smaller reporting company, without a viable business and revenues, the Company does not have the resources to install a dedicated staff with deep expertise in all facets of SEC disclosure and GAAP compliance. As is the case with many smaller reporting companies, the Company will continue to consult with its external auditors and attorneys as it relates to new accounting principles and changes to SEC disclosure requirements. The Company has found that this approach worked well in the past and believes it to be the most cost effective solution available for the foreseeable future. The Company will conduct a review of existing sign-off and review procedures as well as document control protocols for critical accounting spreadsheets. The Company will also increase management’s review of key financial documents and records.

 

As a smaller reporting company, the Company does not have the resources to fund sufficient staff to ensure a complete segregation of responsibilities within the accounting function. However, Company management does review, and will increase the review of, financial statements on a monthly basis, and the Company’s external auditor conducts reviews on a quarterly basis. These actions, in addition to the improvements identified above, will minimize any risk of a potential material misstatement occurring.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company’s internal controls over financial reporting during the first three months of 2014 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 

 

PART II OTHER INFORMATION 

 

ITEM 1. LEGAL PROCEEDINGS 

 

From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that management believes will have a material impact on the financial position of the Company. 

 

Item 1A. Risk Factors. 

 

As a smaller reporting company, we are not required to provide the information required by this item.

 

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

 

Recent Issuances of Unregistered Securities

 

On October 31, 2014, the Company issued 1,000,000 shares to its outside legal counsel as part of its retainer fee payment. These shares were issued pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended, afforded the Company under Section 4(a)(2) promulgated thereunder due to the fact that the issuance did not involve a public offering.

  

Item 3. Defaults

 

None. 

 

Item 4. Mine Safety Disclosures 

 

Not Applicable. 

 

Item 5. Other Information 

 

None.

 

 

Item 6. Exhibits

 

Exhibit No.		Description
3.1		Articles of Incorporation of Ournett Holdings, Inc. (1)
3.2		Bylaws of Ournett Holdings, Inc. (1)
4.1		Form of Promissory Note issued to the September 2013 Investors (1)
4.2		Form of Subscription Agreement by and between the Company and the March 31, 2014 investor (2)
4.3		Form of Promissory Note issued to the March 2014 Investor (2)
10.1		Consulting Agreement entered between the Company and David Vara dated March 7, 2014 (2)
14.1		Code of Ethics (1)
31.1		Certification of Chief Executive Officer under Rule 13(a) — 14(a) of the Exchange Act.
31.2		Certification of Chief Financial Officer under Rule 13(a) — 14(a) of the Exchange Act.
32.1		Certification of the CEO under 18 U.S.C. Section 1350
32.2		Certification of the CFO under 18 U.S.C. Section 1350
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

 

(1)	Incorporated by reference to the Form S-1 Registration Statement as filed with the Securities and Exchange Commission on November 19, 2013.
(2)	Incorporated by reference to the Form S-1/A Registration Statement as filed with the Securities and Exchange Commission on March 11, 2014.

 

 

SIGNATURES

 

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, there unto duly authorized on this 17^th day of April, 2015.

   

	OURNETT HOLDINGS, INC.
	By:	/s/ Xavier Rey
		Xavier Rey
		Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Fernando Koatz
		Fernando Koatz, President Chief Financial Officer (Principal Financial and Accounting Officer)

 

18

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