Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒
|
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
|
|
|
For the three months ended March 31, 2017.
|
OR
☐
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
|
|
For the transition period from
to .
|
Commission file number: 333-209836
Results-Based Outsourcing Inc.
(Exact
name of registrant in its charter)
Delaware
|
|
32-0416399
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
2490 Blackrock Turnpike 344, Fairfield CT
|
|
06824
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Issuer’s
telephone number: 203.635.7600
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.0001
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.
☒ 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 (§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
☐ No ☐
(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, smaller reporting
company or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 if the Exchange
Act.
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated
filer
|
☐
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☒
|
|
|
Emerging
growth company
|
☐
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 12 (a) or the Exchange Act ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
State
the number of shares outstanding of each of the issuer’s
classes of common equity, as of the latest practicable
date.
Class
|
|
Outstanding May 15, 2017
|
Common
Stock, $0.0001 par value per share
|
|
4,107,000
shares
|
TABLE OF
CONTENTS
PART
I
|
FINANCIAL
INFORMATION
|
2
|
|
|
|
ITEM
1.
|
INTERIM FINANCIAL
STATEMENTS
|
2
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|
3
|
ITEM
3.
|
QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
7
|
ITEM
4.
|
CONTROLS AND
PROCEDURES
|
7
|
ITEM
5.
|
OTHER
|
8
|
|
|
|
PART
II
|
OTHER
INFORMATION
|
8
|
|
|
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
8
|
ITEM
1A.
|
RISK
FACTORS
|
8
|
ITEM
2.
|
UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
|
8
|
ITEM
3
|
DEFAULTS UPON
SENIOR SECURITIES
|
8
|
ITEM
4
|
SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
|
|
ITEM
5
|
OTHER
INFORMATION
|
|
ITEM
6
|
EXHIBITS
|
|
SIGNATURES
|
9
|
1
PART I. Financial Information
Item 1. Interim Financial Statements.
Condensed
Balance Sheets as of March 31, 2017 (Unaudited) and December 31,
2016
|
|
|
F-1
|
|
|
|
|
|
|
Condensed
Statements of Operations for the three months ended March 31, 2017
and 2016
|
|
|
F-2
|
|
|
|
|
|
|
Condensed
Statements of Changes in Stockholders’ (Deficit) for the
three months ended March 31, 2017
|
|
|
F-3
|
|
|
|
|
|
|
Condensed
Statements of Cash Flow for the three months ended March 31, 2017
and 2016
|
|
|
F-4
|
|
|
|
|
|
|
Notes
to Condensed Financial Statements
|
|
|
F-5
|
|
2
RESULTS-BASED OUTSOURCING INC
CONDENSED BALANCE SHEETS
AS OF MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016
ASSETS
|
March 31,
2017
|
December 31,
2016
|
|
|
|
CURRENT
ASSETS:
|
|
|
Cash
or cash equivalents
|
$18,385
|
$11,354
|
Accounts
receivable, net
|
19,500
|
10,500
|
TOTAL
CURRENT ASSETS
|
37,885
|
21,854
|
|
|
|
Fixed assets,
net
|
1,625
|
1,950
|
TOTAL
ASSETS
|
$39,510
|
$23,804
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' (DEFICIT)
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
Accounts
payable and accrued expenses
|
$12,875
|
$16,401
|
Accrued
taxes
|
250
|
250
|
Accrued
interest
|
189
|
-
|
Due
to shareholder
|
34,750
|
26,250
|
Note
payable
|
25,000
|
-
|
TOTAL
CURRENT LIABILITIES
|
73,064
|
42,901
|
|
|
|
TOTAL
LIABILITIES
|
73,064
|
42,901
|
|
|
|
STOCKHOLDERS'
(DEFICIT):
|
|
|
Preferred
stock, $.0001 par value, 15,000,000 shares authorized,
|
||
none
issued and outstanding
|
-
|
-
|
Common
stock, $.0001 par value, 75,000,000 shares
authorized,
and 4,107,000 issued and outstanding,
|
|
|
as
of March 31, 2017 and December 31, 2016
|
411
|
411
|
Additional
paid-in capital
|
36,730
|
36,730
|
Retained
deficit
|
(70,695)
|
(56,238)
|
TOTAL
STOCKHOLDERS' (DEFICIT)
|
(33,554)
|
(19,097)
|
TOTAL
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
$39,510
|
$23,804
|
The
accompanying notes to financial statements are
an
integral part of these statements.
F-1
RESULTS-BASED OUTSOURCING INC
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
|
Three Months
Ended
March 31,
2017
|
Three Months
Ended
March 31,
2016
|
|
|
|
Revenues:
|
|
|
Professional
service revenues
|
$12,500
|
$103,478
|
Client expense
reimbursement
|
-
|
413
|
Total
Revenues
|
12,500
|
103,891
|
|
|
|
Cost of
revenues
|
-
|
18,960
|
Cost of revenues
from a related party
|
4,750
|
30,150
|
Gross
Profit
|
7,750
|
54,781
|
|
|
|
Operating
expenses:
|
|
|
Marketing and
sales
|
282
|
287
|
Stock based
compensation
|
-
|
1,640
|
General and
administrative
|
18,736
|
34,523
|
General and
administrative costs from a related party
|
3,000
|
17,500
|
Total
operating expenses
|
22,018
|
53,950
|
|
|
|
Net
Income (Loss) from operations
|
(14,268)
|
831
|
|
|
|
Other
expenses
|
|
|
Interest
expense
|
189
|
-
|
Total
other expenses
|
189
|
-
|
|
|
|
Net
Income (Loss) before taxes
|
(14,457)
|
831
|
|
|
|
Net
Income (loss) applicable to common shareholders
|
$(14,457)
|
$831
|
|
|
|
Net
income( loss) per share - basic and diluted
|
$(0.00)
|
$0.00
|
|
|
|
Weighted
number of shares outstanding -
|
|
|
Basic
and diluted
|
4,107,000
|
4,065,089
|
The
accompanying notes to financial statements are an integral part of
these statements.
F-2
RESULTS-BASED OUTSOURCING INC
CONDENSED STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2017
|
Preferred
Stock
|
Common
|
Paid-In
|
Retained
|
Stockholders'
|
||
|
Shares
|
Par
Value
|
Shares
|
Par
Value
|
Capital
|
(Deficit)
|
(Deficit)
|
|
|
|
|
|
|
|
|
Balance December
31, 2016
|
-
|
$-
|
4,107,000
|
$411
|
$36,730
|
$(56,238)
|
$(19,097)
|
|
|
|
|
|
|
|
|
Net loss for
period
|
-
|
-
|
|
|
|
(14,457)
|
(14,457)
|
|
|
|
|
|
|
|
|
Balance March 31,
2017
|
-
|
$-
|
4,107,000
|
$411
|
$36,730
|
$(70,695)
|
$(33,554)
|
The
accompanying notes to financial statements are an integral part of
these statements.
F-3
RESULTS-BASED OUTSOURCING INC
CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND
2016
|
Three Months
Ended
March 31,
2017
|
Three Months
Ended
March 31,
2016
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
Net
income (loss)
|
$(14,457)
|
$831
|
Adjustments
to reconcile net income (loss) to cash provided by (used in)
operating activities:
|
|
|
|
|
|
Stock based
compensation
|
-
|
1,640
|
Depreciation
|
325
|
325
|
|
|
|
Change
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
(9,000)
|
(20,413)
|
Due to
shareholder
|
8,500
|
-
|
Prepaid
expenses
|
-
|
5,000
|
Accounts payable
and accrued expenses
|
(3,526)
|
8,708
|
Accrued interest
expense
|
189
|
-
|
Net
cash used in operating activities
|
$(17,969)
|
$(3,909)
|
|
|
|
CASH
FLOW FROM FINANCING ACTIVITIES:
|
|
|
Proceeds from note
issuance
|
25,000
|
-
|
Net
cash provided by financing activities
|
$25,000
|
$-
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
7,031
|
(3,909)
|
|
|
|
CASH
AND CASH EQUIVALENTS at beginning of year
|
11,354
|
4,953
|
CASH
AND CASH EQUIVALENTS at end of year
|
$18,385
|
$1,044
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
Cash
paid for:
|
|
|
Interest
|
$-
|
$-
|
Income
Taxes
|
$-
|
$-
|
The
accompanying notes to financial statements are an integral part of
these statements.
F-4
RESULTS-BASED OUTSOURCING
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Note 1. The Company History and Nature of the Business
Results-Based
Outsourcing Inc. (formerly Digital Commerce Solutions Inc) (the
“Company”), formed on July 22, 2013, is engaged in
providing a variety of out-sourced business services which include;
accounting and bookkeeping, marketing, document storage, staffing,
recruiting and personal executive organization (collectively, the
“Services”). The Services are grouped into two
offerings; (i) Business Process Outsourcing (“BPO”),
and (ii) Software Managed Outsourcing (“SMO”). BPO
services brings people and process to a client’s business
that can ranged from providing a entire back office to individual
projects. SMO services bring software tools to a client’s
business to help them run more efficiently and
effectively.
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 a retained deficit of
$70,695 and had a working capital deficit of $35,179 at March 31,
2017. Our growth is dependent upon achieving sales growth,
management of operating expenses and ability of the Company to
obtain the necessary financing to fund future obligations and pay
liabilities arising from normal business operations when they come
due, and upon profitable operations.
Management
has concluded that due to the conditions described above, there is
substantial doubt about the entity’s ability to continue as a
going concern through May 15, 2018. We have evaluated the
significance of these conditions in relation to our ability to meet
our obligations and believe that we may 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.
Note 2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
For
purposes of reporting within the statement of cash flows, the
Company considers all cash on hand, cash accounts not subject to
withdrawal restrictions or penalties, and all highly liquid debt
instruments purchased with a maturity of three months or less to be
cash and cash equivalents. The Company’s cash and cash
equivalents are located in a United States bank. The Company does
not have any cash equivalents as of March 31, 2017 or December 31,
2016.
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. 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. 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. At March 31, 2017 and and December 31, 2016, the
allowance for potential credit losses was $0
Fixed Assets
Office
equipment is stated at cost and depreciated over three years using
the straight line method of accounting. For the three months ending
March 31, 2017, and 2016, the Company recorded depreciation expense
of $325 and $325, respectively.
F-5
Revenue Recognition
The
Company derives its revenue from the sale of compliance, legal,
risk management and management and public reporting consulting
services. The Company utilizes written contracts as the means to
establish the terms and condition services are sold to
customers.
Consulting Services
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:
●
|
there
is persuasive evidence of an arrangement;
|
●
|
the
service has been provided to the customer;
|
●
|
the
collection of the fees is reasonably assured; and
|
●
|
the
amount of fees to be paid by the customer is fixed or
determinable.
|
The
Company recognizes revenue as services are performed or monthly
based upon contract terms. Contracts may either be for a specific
project, or, a monthly recurring fee.
Reimbursements
The
Company incurs certain out-of-pocket expenses that are reimbursed
by its clients, which are accounted for as revenue in its Statement
of Operations.
Net Income (Loss) per Common Share
Basic
income (loss) per share is computed by dividing the net income
(loss) attributable to the common stockholders by the weighted
average number of shares of common stock outstanding during the
period. Fully diluted income per share is computed similar to basic
income per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if
the additional common shares were dilutive. There were no dilutive
financial instruments issued or outstanding for the three month
periods ended March 31, 2017 or 2016.
Income Taxes
The
Company accounts for income taxes pursuant to FASB ASC 740.
Deferred tax assets and liabilities are determined based on
temporary differences between the bases of certain assets and
liabilities for income tax and financial reporting purposes. The
deferred tax assets and liabilities are classified according to the
financial statement classification of the assets and liabilities
generating the differences.
The
Company maintains a valuation allowance with respect to deferred
tax assets. The Company establishes a valuation allowance based
upon the potential likelihood of realizing the deferred tax asset
and taking into consideration the Company’s financial
position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of
sufficient taxable income within the carry-forward period under the
Federal tax laws. Changes in circumstances, such as the Company
generating taxable income, could cause a change in judgment about
the realizability of the related deferred tax asset. Any change in
the valuation allowance will be included in income in the year of
the change in estimates
Fair Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable
judgment is required in estimating fair value. Accordingly, the
estimates of fair value may not be indicative of the amounts the
Company could realize in a current market exchange. As of March 31,
2017 the carrying value of accounts receivable, accounts
payable-trade and accrued liabilities approximated fair value due
to the short-term nature and maturity of these
instruments.
F-6
Customer Concentration Disclosure.
For
the three months ended March 31, 2017, and 2016, three and five
customers make up 100%, and 91%, respectively, of our gross
revenue. They represent 27%, 36% and 36% for three months ended
March 31, 2017 and 41%, 14%, 14%, 11% and 11% for the three months
ended March 31, 2016. Only one customer was present in both
periods.
\
Stock-Based Compensation
Stock
compensation arrangements with non-employee service providers are
accounted for in accordance ASC 505-50 Equity-Based Payments to
Non-Employees, using a fair value approach. For the
three months ended March 31, 2017, and 2016, the Company recorded
$0 and $1,640, respectively in stock-based
compensation.
Estimates
The
financial statements are prepared on the basis of accounting
principles generally accepted in the United States. The preparation
of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities as of March 31, 2017 and cumulative expenses from
inception. Actual results could differ from those estimates made by
management.
Recent accounting pronouncements
In
March 2016, the Financial Accounting Standards Board issued
Accounting Standards Codification Update No. 2016-09 Compensation
– Stock Compensation (Topic 718). The amendments in this
update affect all entities that issue share-based payment awards to
their employees. The areas for simplification in this Update
involve several aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification
of awards as either equity or liabilities, and classification on
the statement of cash flows. For public business entities, the
amendments in this Update are effective for annual periods
beginning after December 15, 2016, and interim periods within those
annual periods.
In May
2014, the FASB issued ASU 2014-09, Revenue from Contracts with
Customers which modifies how all entities recognize revenue and
various other revenue accounting standards for specialized
transactions and industries. This update is a comprehensive new
revenue recognition model that requires a company to recognize
revenue to depict the transfer of goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. In
August 2015, the FASB issued ASU 2015-14, which deferred the
effective date of the ASU to fiscal years beginning after December
15, 2017, and interim periods within those fiscal years. The
Company has begun limited evaluation of the possible impact of ASU
2014-15 including obtaining training on ASU-2014-09 and the
contract review and does not anticipate that it will have a
material impact on the Company's consolidated financial statements.
We have a small number of conflicts which require an assessment and
believe we have sufficient time for the implementation of
ASU-2014-19.
The
Company has implemented all new accounting pronouncements that are
in effect and that may impact its financial statements and does not
believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on its financial
position or results of operations.
3. Note Payable
On
March 8, 2017, the Company executed a promissory note (the
“Note”) with an unaffiliated lender in the amount of
$25,000. The Note matures one year from issuance and has a 12%
interest rate. For the three months ended March 31, 2017, the
Company recorded $189 in interest expense
4. Common Stock
On
February 16, 2016, the Board of Directors approved an agreement
with legal counsel for the Company which included; the issuance of
82,000 shares of common stock and the total payment of $15,000 to
counsel for services rendered through the date the Company’s
S-1 filing is declared effective. The $15,000 will be paid the
sooner of any combination of; (i) the sum of $500 per month
commencing on November 1, 2015, (ii) the first use of proceeds from
the S-1 offering, or (iii) the change of control of the
Company.
F-7
5. Income Taxes
The
provision for income taxes for the three months ended March 31,
2017 and 2016 was as follows (assuming a 15%, and 3% effective tax
rate for federal and state taxes, respectively):
|
Three Months
ended
March 31,
2017
|
Three Months
Ended
March 31,
2016
|
|
|
|
Current
Tax Provision:
|
|
|
Federal-State-Local
|
-
|
$-
|
|
|
|
Total current tax
provision
|
$-
|
$-
|
|
|
|
Deferred
Tax Provision:
|
|
|
Loss
carry-forwards
|
(2,602)
|
-
|
Change
in valuation allowance
|
2,602
|
-
|
|
|
|
Total deferred tax
provision
|
$-
|
$-
|
|
|
|
The Company had
deferred income tax asset as of as follows:
|
||
|
|
|
|
March 31,
2017
|
December 31,
2016
|
Loss
carry-forwards
|
$(12,725)
|
$(8,436)
|
Less
- valuation allowance
|
12,725
|
8,436
|
|
|
|
Total net deferred
tax assets
|
$-
|
$-
|
The
Company provided a valuation allowance equal to the deferred income
tax assets for period ended March 31, 2017 because it is not
presently known whether future taxable income will be sufficient to
utilize the loss carry-forwards.
As of
March 31, 2017, the Company had approximately $72,193 in tax loss
carry-forwards that can be utilized future periods to reduce
taxable income, and expire by the year 2037.
The
Company did not identify any material uncertain tax positions.
The Company did not recognize any interest or penalties for
unrecognized tax benefits.
The
federal income tax returns of the Company are subject to
examination by the IRS, generally for the three years after they
are filed. The tax returns for the year end 2014, 2015 and 2016 are
still subject to examination.
F-8
6. Related Party Loans and Transactions
William Schloth
On
October 1, 2015 the Company has engaged the services of William
Schloth (“WS Agreement”) to provide assistance with
filing of the SEC Form S-1, general accounting, finance, general
management and client delivery services. Mr. Schloth is the husband
our Mary Ellen Schloth, the CEO and majority shareholder of MLH,
our majority shareholder. The WS Agreement provides for a monthly
consulting fee of $5,000, plus additional payments based upon
services rendered during a period. On January 1, 2017 the WS
Agreement was revised to include a new minimum monthly payment of
$1,000 which will represent a minimum of 10 hours of work per
month. Should hours worked exceed the minimum hours, additional
payments will be agreed upon amount. The Company did not owe any
money under the WS Agreement as of March 31, 2017
The
Company has reflected the above arrangement in statement of
operation as related party expenses. For the three months ended
March 31, 2017 and 2016 the Company paid $7,750, and $47,650,
respectively. For the three months ended March 31, 2017 and 2016,
of that amount, $3,000 and $17,500, and, $4,750 and $30,150 have
been allocated to operating expenses and cost of revenue,
respectively.
Shareholder Loan
For the
period ended, March 31, 2017 the Company owed MLH $34,750. The
loans are non-interest bearing with no agreement in place for
repayment.
F-9
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:
1.
|
|
our
future operating results;
|
2.
|
|
our
business prospects;
|
3.
|
|
any
contractual arrangements and relationships with third
parties;
|
4.
|
|
the
dependence of our future success on the general
economy;
|
5.
|
|
any
possible financings; and
|
6.
|
|
the
adequacy of our cash resources and working
capital.
|
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.
Summary of Business
We are
a consulting company for the small business enterprise market
(hereinafter referred to as the “SME
Market”). In general, SME Market companies
range from sole proprietors – the one-person operation with
no employees to those companies that have up to 50
employees. We target those SME companies with
limited resources and/or infrastructure looking to outsource all or
part of their operations and/or corporate level
functions. To get started, we recommend clients start
with outsourcing one or more of these areas; financial and
management reporting, accounting, tax reporting, legal and
compliance, human resource management or sales and marketing
(collectively our “Business Services”). We also
look to help clients identify, implement and maintain business
software products that are currently available in the marketplace
that help streamline business operations through automation (our
“Managed Software
Services”). Our Business Services and
Managed Software Services are collectively referred to as our
Services.
Outsourcing
has clearly becoming an integral part of a business strategy to
achieve unparalleled performance. Packaged outsourcing takes
it to the next level. Savvy business owners intent on guiding their
companies toward optimized performance began by outsourcing a
single process. That is the first step. Now, leading
organizations are seeing the benefits from combining - or packaging
- a comprehensive set of end-to-end processes across core functions
into a single, outsourcing arrangement - for example, accounting,
tax and risk management.
Bundled
outsourcing also addresses the challenge of managing multiple
providers and contacts. It is easier to manage and measure
because it creates standardized, repeatable processes under one
integrated governance structure that ensures maximum performance at
lower sustained costs.
3
Our Opportunity
SME
company owners and managers often are tasked with functioning in a
number of capacities in order to grow their
business. However, at some point in time in the
growth curve, a business owner or manager is faced with the
decision of continuing to function in a number of capacities or to
seek outside assistance. To help with this decision, we bring
outsourced people, business processes and software tools to
businesses to reduce costs and to run more efficiently and
effectively. We believe that if a small business
doesn’t embrace and leverage the power of outsourcing and
automation, it significantly limits the company’s ability to
keep pace with business growth goals and
objectives. As such, we believe that
our Services met a large un-met need for SME
companies.
The SME
Market is particularly attractive because:
●
|
it is
large, continues to grow and remains underserved by professional
services companies; and
|
●
|
it
typically has fewer in-house resources than larger businesses and,
as a result, is generally more dependent on external
resources;
|
Our Strategy
Our
strategy for growing our operations includes:
●
|
Rolling
out various outbound sales and marketing campaigns to grow our
client base;
|
●
|
Expanding
our outsourced third party provider base to assist in cost
efficiently delivering our services; and
|
●
|
Growth
through acquisition with complementary service providers and
software product companies.
|
Plan of Operations
We
plan to establish a broad customer base by various traditional and
internet marketing campaigns.
Over
the next twelve months we plan to;
●
continue to
standardize the processes of how our consulting services are
provided. In January 2017 we introduced our new 4-Part Total
Business Management Approach. The approach breaks down
client’s businesses into 4 separate planning
exercises;
1.
Business innovation
and growth plan
2.
Risk management
plan
3.
Capital funding
plan
4.
Owner and employee
wellness plan.
To
support the delivery and manage the results of this approach we
have developed a tool we refer to as our Business Innovation and
Growth (BIG) Check-Up.
●
increase efforts to
acquire new clients. We plan to do internet marketing that might
include, search engine marketing, blogging, social media,
affiliated marketing, organic and paid for search engine
optimization. We may also employ certain traditional marketing
tactics, including, mail, phone calls, content development,
industry networking and direct selling. In February 2017, along
with the launch of our new website we commenced our 1st major social media
and internet marketing campaign. For the three months ended March
31, 2017, we acquired two new clients from the
campaign.
4
●
Expand our custom
“program offerings”. Along with the launch of our new
website, we introduced some of the programs. That included,
Healthcare Cost Containment, Cause-Related Marketing, Business
Innovation & Growth (BIG) “Boot
Camps.”
●
Refine through
independent research and feed-back from clients, our database of
what we consider best-in-class business software-as-a-service
tools. We currently have database of
approximately 100 such products.
●
Further explore the
use of “For-Cause Alliance Partnerships” whereby we
partner up with non-profit educational-like mission based
organizations to further both business plans and reputation with
the local community
Results of Operations
Summary of Key Results
For the unaudited three month periods ending March 31, 2017 and
2016
Revenues and Cost of Revenues
Total
revenue for the three months ended March 31, 2017 and 2016 was
$12,500 versus $103,891, respectively. Revenues are from
professional services. The decline in revenue was due to the
completion of various engagements. The Company has been transition
its business model to more of a package service with recurring
monthly payments. The revenue for the period ended March 31, 2017
was a result of two new clients and one legacy client who
engagement continues with the Company since March 31,
2016.
Cost of
revenues for the three months ended March 31, 2017 and 2016 was
$7,750 versus $54,781, respectively. Cost of revenue
included payments to third party independent contractors plus
$4,750 and $30,150 paid to a related party for the three months
ended March 31, 2017 and 2016, respectively. The decrease in cost
of revenue was due to fewer clients and the shift of the
Company’s business to more of a packaged services model with
smaller fees but recurring monthly payments.
Operating Expenses
Total
operating expenses for the three months ended March 31, 2017 and
2016, was $22,018 versus $53,950, respectively. The decrease was
primarily due to decreased professional services fees. The Company
and stock-based compensation of $0 and $1,640,
respectively.
Liquidity and Capital Resources
As of March 31, 2017
At
March 31, 2017, we had cash of $18,385 and a working capital
deficit of $35,179. Since inception, we have
raised $35,500 in equity capital. We had a total
stockholders’ deficit of ($33,554) and an accumulated deficit
of $70,695 as of March 31, 2017.
5
We had
$17,969 and $3,909 of cash used in operating activities for the
three months ended March 31, 2017 and 2016,
respectively. These include a net loss of $14,457 and
net income of $831, respectively. Cash
flows provided by (used in) operating activities included changes
in operating assets and liabilities totaling ($3,837) and ($6,705)
for the three months ended March 31, 2017 and 2016, respectively.
During the three months ended March 31, 2017, MHL loaned the
Company $8,500.
On
March 8, 2017, we executed a promissory note for
$25,000.
Our
future growth in dependent upon achieving sales growth, management
of operating expenses and ability of the Company to obtain the
necessary financing to fund future obligations, and upon profitable
operations.
We
believe we will require a minimum of $50,000 in additional cash
over the next 12 months to maintain our regulatory reporting and
filings and cover our operations costs. 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, our
major shareholder, Mountain Laurel Holdings Inc. has indicated that
they may be willing to provide funds required to maintain the
reporting status in the form of a non-secured loan for the next
twelve months as the expenses are incurred if no other proceeds are
obtained by the Company. However, there is no
contract in place or written agreement securing this agreement.
Management believes if the Company cannot maintain its reporting
status with the SEC it will have to cease all efforts directed
towards the Company. As such, any investment previously made would
be lost in its entirety.
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 then existing
directors, are approved by vote of the stockholders, or are fair to
us as a corporation as of the time it is us at is authorized,
approved or ratified by the board. We will conduct an appropriate
review of all related party transactions on an ongoing basis, and,
where appropriate, we review the potential of conflicts of
interest.
Off-balance sheet arrangements
The
Company has no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect or change on
the Company’s financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources that are material to investors. The term
“off-balance sheet arrangement” generally means any
transaction, agreement or other contractual arrangement to which an
entity unconsolidated with the Company is a party, under which the
Company has (i) any obligation arising under a guarantee contract,
derivative instrument or variable interest; or (ii) a retained or
contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support
for such assets.
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 and income taxes. These policies require that we
make estimates in the preparation of our financial statements as of
a given date.
6
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 compliance, legal,
risk management and management and public reporting consulting
services. The Company utilizes written contracts as the means to
establish the terms and condition services are sold to
customers.
Consulting Services
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:
|
●
|
there
is persuasive evidence of an arrangement;
|
|
●
|
the
service has been provided to the customer;
|
|
●
|
the
collection of the fees is reasonably assured; and
|
|
●
|
the
amount of fees to be paid by the customer is fixed or
determinable.
|
The
Company recognizes revenue as services are performed or monthly
based upon contract terms. Contracts may either be for a specific
project or a monthly recurring fee.
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.
7
(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
Part II- Other Information
Item 1. Legal Proceedings
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.
Item 1A. Risk Factors
Not
applicable to a “smaller reporting company” as defined
in Item 10(f)(1) of SEC Regulation S-K
Item 3. Recent Sale of Unregistered Securities
None.
Item 2. Exhibits
Exhibit Number
|
|
Description
|
31.1*
|
|
Rule 13a-14(a)
Certification of the Chief Executive and Financial
Officer
|
32.1*
|
|
Section 1350
Certification of Chief Executive and Financial Officer
|
*
F
|
|
* Filed along with
this document
|
8
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, thereunto duly authorized.
|
Results-Based
Outsourcing Inc
|
|
|
|
|
Dated:
May 15, 2017
|
By:
|
//Mary
Ellen Schloth
|
|
|
Mary
Ellen Schloth
|
|
|
Chief
Executive Officer, Chief Accounting Officer &
Chairman
|
|
|
|
Pursuant to the
requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on
behalf of the registrant and in the capacities
indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Mary
Ellen Schloth
|
|
Chief Executive
Officer, Chief Accounting Officer & Chairman
|
|
May 15,
2017
|
Mary Ellen
Schloth
|
|
|
|
|
|
|
|
|
|
9