American Housing REIT Inc. - FORM 10-Q

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EX-32.1 - CERTIFICATION - American Housing REIT Inc.	ontg_ex321.htm
EX-31.1 - CERTIFICATION - American Housing REIT Inc.	ontg_ex311.htm
EXCEL - IDEA: XBRL DOCUMENT - American Housing REIT Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the three months ended June 30, 2012.

	OR

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________ to___________ .

Commission file number: 333-170828

Ontarget360 Group Inc.

(Exact name of registrant in its charter)

Delaware		27-1662812
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Park Lane, Suite 1319, Boston MA		02210
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number: 877-879-7631

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 $0.001

Indicate by check mark whether the registrant(1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

(Does not currently apply to the Registrant)

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

Large accelerated filter	o	Accelerated filter	o

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

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Class		Outstanding August 11, 2012
Common Stock, $0.001 par value per share		3,454,520 shares

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION

ITEM 1.	INTERIM FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	4
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	8
ITEM 4.	CONTROLS AND PROCEDURES	8
ITEM 5.	OTHER	8

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	9
ITEM 1A.	RISK FACTORS	9
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3	DEFAULTS UPON SENIOR SECURITIES
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5	OTHER INFORMATION
ITEM 6	EXHIBITS	9

SIGNATURES		10

PART I. Financial Information

ITEM 1. INTERIM FINANCIAL STATEMENTS.

INDEX TO UNAUDITED FINANCIAL STATEMENTS

	Page
Interim Financial Statements

Condensed Balance Sheets as of June 30, 2012 (unaudited) and September 30, 2011		F-1

Condensed Statements of Operations for the three and nine months ended June 30, 2012 and 2011 (unaudited)		F-2

Condensed Statements of Changes in Stockholders’ Equity (Deficit) from inception to June 30, 2012 (unaudited)		F-3

Condensed Statements of Cash Flow for the nine months ended June 30, 2012 and 2011 (unaudited)		F-4

Condensed Notes to Interim Financial Statements (unaudited)		F-5

ONTARGET360 GROUP, INC (FORMERLY CWS MARKETING & FINANCE GROUP INC)

CONDENSED BALANCE SHEETS

JUNE 30, 2012 AND SEPTEMBER 30, 2011

ASSETS	(Unaudited)
	6/30/12			9/30/11
CURRENT ASSETS:
Cash	$	6,974		$	14,622
Accounts receivable, net		2,500			-
TOTAL CURRENT ASSETS		9,474			14,622

TOTAL ASSETS	$	9,474		$	14,622

LIABILIATIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	23,250		$	30,271
Due to shareholder		26,500			-
Income tax payable		600			600
TOTAL CURRENT LIABILITIES		50,350			30,871

TOTAL LIABILITIES		50,350			30,871

STOCKHOLDERS' DEFICIT:
Preferred stock, $.001 par value, 5,000,000 shares authorized,
none issued and outstanding		-			-
Common stock, $.001 par value, 10,000,000 shares authorized,
3,454,520 and 3,149,000, shares issued and outstanding,
as of June 30, 2012 and September 30, 2011, respectively		3,455			3,149
Additional paid-in capital		104,816			71,101
Retained deficit		(149,147	)		(90,499	)
TOTAL STOCKHOLDERS' DEFICIT		(40,876	)		(16,249	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	9,474		$	14,622

See accompanying condensed notes to interim financial statements.

F-1

ONTARGET360 GROUP INC (FORMERLY CWS MARKETING & FINANCE GROUP INC)

CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED

JUNE 30, 2012 AND 2011

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011			Nine Months Ended June 30, 2012			Nine Months Ended June 30, 2011
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
Custom professional service revenues	$	-		$	5,500		$	10,650		$	10,500
Monthly subscription fees		37,167			2,100			50,667			8,950
Monthly subscription fees - related party		-			750			1,500			2,250
Total Revenues		37,167			8,350			62,817			21,700

Cost of revenues		17,884			-			19,409			-
Cost of revenues from a related party		2,000			2,000			11,000			7,000
Gross Profit		17,283			6,350			32,408			14,700

Operating expenses:
Marketing and sales		10,285			-			10,285			-
General and administrative		35,113			7,280			60,126			18,374
General and administrative costs from a related party		12,000			2,000			20,000			14,000
Total operating expenses		57,398			9,280			90,411			32,374

Loss from operations		(40,115	)		(2,930	)		(58,003	)		(17,674	)

Other (income) expenses
Interest expense		607			-			1,000			-
Change in the fair value of derivative liability		(725	)		-			(755	)		-
Total other expenses		(118	)		0			245			0

Loss before taxes		(39,997	)		(2,930	)		(58,248	)		(17,674	)

Income tax provision		0			0			400			500

Net loss	$	(39,997	)	$	(2,930	)	$	(58,648	)	$	(18,174	)

Net loss per share - basic
Net loss per share - basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)

Weighted number of shares outstanding -
Basic and diluted		3,454,520			3,149,000			3,339,534			3,149,000

See accompanying condensed notes to interim financial statements.

F-2

ONTARGET360 GROUP INC (FORMERLY CWS MARKETING & FINANCING GROUP INC)

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT)

FROM INCEPTION (DECEMBER 4, 2009) THROUGH JUNE 30, 2012

	Preferred Stock				Common				Paid-In			Sub			Retained			Stockholders'
	Shares		Par Value		Shares		Par Value		Capital			Rec'b			(Deficit)			(Deficit)

Balance at Inception		-	$	-		0	$	-	$	-		$	-		$	-		$	-

Issuance of stock						3,149,000		3,149		56,101			(5,500	)					53,750
Net loss for period		-		-												(39,212	)		(39,212	)

Balance September 30, 2010		-	$	-		3,149,000	$	3,149	$	56,101		$	(5,500	)	$	(39,212	)	$	14,538

Shareholder contribution										15,000									15,000
Subscription receivable payment													5,500						5,500
Net loss for period		-		-												(51,287	)		(51,287	)

Balance September 30, 2011		-	$	-		3,149,000	$	3,149	$	71,101		$	-		$	(90,499	)	$	(16,249	)

Stock issued for services						255,520		256		12,520									12,776
Sale of stock, net of offering costs						50,000		50		21,950									22,000
Fair value of warrant issuance										(24,941	)								(24,941	)
Reclassification of derivative liability to stockholders' equity										24,186									24,186
Net loss for period																(58,648	)		(58,648	)

Balance June 30, 2012		-	$	-		3,454,520	$	3,455	$	104,816		$	-		$	(149,147	)	$	(40,876	)

See accompanying condensed notes to interim financial statements.

F-3

ONTARGET360 GROUP, INC (FORMERLY CWS MARKETING & FINANCE GROUP INC)

CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED

JUNE 30, 2012 AND 2011

	Nine Months Ended June 30, 2012			Nine Months Ended June 30, 2011

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(58,648	)	$	(18,174	)
Adjustments to reconcile net loss to cash used in operating activities:

Provision for doubtful accounts		3,000			-
Stock based compensation		12,776			-
Change in derivative liability		(755	)		-

Change in operating assets and liabilities:
Accounts receivable		(5,500	)		(1,000	)
Income tax payable		-			250
Accounts payable and accrued expenses		(7,021	)		(9,500	)
Deferred revenue		-			1,000
Net cash used in operating activities	$	(56,148	)	$	(27,424	)

CASH FLOW FROM FINANCING ACTIVITIES:
Sale of common stock, net of offering costs		22,000			-
Loan from shareholder		26,500			-
Proceeds from shareholders and director contributions					15,000
Proceeds from collection of subscription receivable		-			5,500
Net cash provided by financing activities	$	48,500		$	20,500

NET DECREASE IN CASH		(7,648	)		(6,924	)

CASH AND CASH EQUIVALENTS at beginning of period		14,622			26,588
CASH AND CASH EQUIVALENTS at end of period	$	6,974		$	19,664

Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	-		$	-
Income Taxes	$	-		$	-

Supplemental schedule of non-cash investing and financing activities
Sale of stock for subscription receivable	$	-		$	12,500
Reclassification of derivative liability to stockholders' equity	$	24,186

See accompanying condensed notes to interim financial statements.

F-4

ONTARGET360 GROUP, INC (FORMERLY CWS MARKETING & FINANCE GROUP INC)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

Note 1. The Company History and Nature of Business

Ontarget360 Group Inc (formerly CWS Marketing & Finance Group Inc) (the “Company”), formed on December 4, 2009, is an interactive marketing agency that provides people, processes and tools to help clients improve the results generated by their marketing efforts. The services include both interactive marketing optimization and website implementation services, including website design and technology support including point of purchase capabilities and driving website traffic.

On September 1, 2011, the Securities & Exchange Commission declared the Company’sForm S-1 filing effective and the Company became a reportingentity. In an effort to accelerate the current business plan, on December 29, 2011 an existing shareholder and an affiliate of a shareholder expanded their roles. Mr. Howard Kaplan became the Chief Executive Officer and Mr. William Schloth became interim Chief Financial Officer. Mr. Kaplan & Mr. Schloth also became Directors. As part of this transition, CFO Managed Fund I, LLC, an entity owned by the wife of Mr. Schloth, acquired all the share holdings of Craig Samuels and Mitch Metzman, the prior CEO and CFO, respectively, and Directors of the Company. On January 4, 2012, the Company changed its name from CWS Marketing & Finance Group Inc. to Ontarget360 Group Inc. On May 2, 2012, William Schloth, the Company’s director and interim chief financial officer resigned. There were no disagreements between Mr. Schloth and the Company. Mr. Schloth will continue to assist the Company with various financial and accounting activities. As soon as deemed required, the Company intends to hire a person to fill the Chief Financial Officer role and expand its Board of Directors.

Through a perpetual licensing agreement with FN Implementation and Financing Partners, Inc (“FNIFP”) (the “Licensing Agreement”) dated as of December 31, 2009, the Company was granted full access and use to the proprietary reporting methodology to AccountMETRICing Architecture™(“AAI”). AAI is a reporting system that is built on the specific needs of clients to understand and manage key performance indicators related to their business. Under the Licensing Agreement the Company will payout a 5% royalty on all clients that specifically utilize the reporting methodology along with the other services provided by the Company. No royalty fees have been earned from inception through June 30, 2012.

As of June 30, 2012, we did not have any fixed operating expenses. However, over the next twelve months we expect to hire employees both to deliver our services as well as perform other administrative and operating activities. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, we would need to either borrow funds from our officers or raise additional capital through equity or debt financings. We expect our current shareholders will be willing and able to provide such additional capital. However, we cannot be certain that such capital (from our officers or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial and operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest audited financial statements. The audited financial statements for the year ended September 30, 2011 are included in the Company’s Annual Report on Form 10-K, filed with the SEC on January 13, 2012.

F-5

Note 2. Summary of Significant Accounting Policies

Revenue Recognition

The Company derives its revenue from the sale of marketing consulting services through both recurring subscription based arrangements and custom consulting projects. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers. Where applicable, the Company will also look to include performance-based compensation upside in its agreements whereby the Company will share in customer’s incremental increases in revenue (“Revenue Sharing Arrangements”). As of June 30, 2012, the Company has not established any Revenue Sharing Arrangements.

Marketing consulting service revenues

Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition The Company recognizes revenue when all of the following conditions are met:

	●	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.

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.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses and income tax payable approximate their fair values due to the short-term maturities of these financial instruments.

Derivative Instruments.

Derivative instruments consist of common stock warrants. These financial instruments are recorded in the balance sheet as liabilities.

F-6

Fair Value Measurements.

The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received if an asset were to be sold or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

-	Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data for substantially the full term of the assets or liabilities.

-	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities.

Earnings per share

Earnings per share, in accordance with the provisions of ASC 260-10, Earnings Per Share, is computed by dividing net income by the weighted average number of common stock shares outstanding during the period. Potentially dilutive securities at June 30, 2012 consist of 82,500 common stock purchase warrants.

Recent Accounting Requirements

Management does not believe that any recently issued, but not currently effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Note 3. Promissory Notes

On December 30, 2011, the Company entered into a promissory note agreement with a shareholder in the amount of $6,000. On January 9, 2012 and February 8, 2012, the Company entered into promissory note agreements with the same shareholder in the amounts of $3,000 and $7,500, respectively (all collectively, the “Notes”).

On May 17, 2012, the Company entered into a promissory note agreement with a shareholder in the amount of $10,000.

The Notes have a 12% interest rate and, unless paid off by the Company in advance, mature one year from issuance (“Maturity”). Interest is payable six months from issuance date and then at Maturity. The Notes have no prepayment penalty. For the three and nine months ended June 30, 2012, the Company recorded $607, and $1,000, respectively, in interest expense.

F-7

Note 4. Stockholders’ Equity

Common Stock

The Company is authorized to issue up to 10,000,000 shares of common stock and 5,000,000 shares of preferred stock both with par value of $0.001. The Company had 3,454,520 and 3,149,000 shares of common stock issued and outstanding as of June 30, 2012 and September 30, 2011, respectively.

Issuance of Common Stock

As part of a private placement memorandum dated February 5, 2012 (the “Private Placement”), the Company issued 50,000 shares of restricted common stock and 50,000 Series A and 25,000 Series B stock purchase warrants (the “Warrants”), to one investor for gross proceeds of $25,000. Proceeds from the offering, net of cash issuance costs of $3,000 paid to the placement agent, were $22,000. The Series A and Series B Warrants may be exercised for $0.50, and $1.00, respectively. The Warrants expire in three years from issuance. The Private Placement terminated on March 31, 2012. In addition to the $3,000 of issuance costs, the Company also issued to the placement agent 5,000 Series A and 2,500 Series B stock purchase warrants with the same terms as the warrants issued to the investor. The placement agent is a related party.

Stock-Based Compensation

On December 29, 2011, the Board of Directors consented to the issuance of 255,520 shares of Common Stock to Company counsel in return for services performed in the past with a total dollar value of $12,776 at a price equal to $0.05.

Note 5. Derivative Instruments

March 2012 Warrants

As part of a private placement memorandum (the “Private Placement”), on March 22, 2012, the Company issued 50,000 shares of restricted common stock and 50,000 Series A and 25,000 Series B stock purchase warrants (the “Warrants”), to one investor for gross proceeds of $25,000. Additionally, the Company granted 5,000 Series A and 2,500 Series B warrants to the placement agent. The Series A and Series B Warrants may be exercised for $0.50, and $1.00, respectively. The Warrants expire in three years from issuance. Under the terms of the warrants, we have an obligation to make a cash payment to the holders for any gain that could have been realized if the holders exercise the warrants and we subsequently fail to deliver a certificate representing the shares to be issued. Additionally the warrants contain an adjustment provision whereby the exercise price is adjustable upon the occurrence of certain events, including the issuance by the Company of common stock or common stock equivalents at a price which is lower than the current exercise price. The fair value of the warrants is estimated, at the end of each quarterly reporting period, using the Black-Scholes model. The Company estimated the fair value of the warrants as of the date of grant using Black-Scholes models to be $24,941. On May 18, 2012, the Company amended the warrants issued as part of the private placement. The warrant holder agreed to such amendments through written confirmation. The Company calculated the fair value of the warrants as of the amendment date and reclassified the remaining derivative liability to stockholders’ equity. The amount of the reclassification was $24,186. The assumptions used in computing the fair value as of the amendment date are a common stock price of $0.50, exercise prices of $0.50 for the Series A and $1.00 for the Series B, expected volatility of 106.12% over the remaining term of three years and a risk free rate of 0.40%. The change in fair value of the for the three and nine months ended June 30, 2012 were ($725) and ($755) has been recorded in the statements of operations.

F-8

Note 6. Fair Value

In accordance with FASB ASC820, “Fair Value Measurements and Disclosures”, the following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and September 30, 2011:

	June 30, 2012			September 30, 2011
	June 30, 2012			September 30, 2011
Beginning Balance	$	-		$	-
Derivative liabilities		24,941			-
Change in fair value		(755	)		-
Reclassification of derivative liability to stockholders’ equity		(24,186	)		-
Ending Balance	$	-		$	-

Note 7. Commitments and Contingencies

Other than the royalties to be paid under the perpetual licensing arrangement the Company has no leases or other written contractual agreements.

Note 8. Related Party Transaction and Arrangements

FN Implementation & Financing Partners, Inc. (“FNIFP”)

Pursuant to a consulting agreement (the “Consulting Agreement”) dated December 15, 2009, the Company entered into an arrangement with FNIFP to provide certain general accounting, finance, legal and client advisory and delivery assistance. The amounts of payment vary according to services provided. For the nine months ended June 30, 2012 and 2011 the Company recorded $19,000 and $21,000, respectively for these various services. At June 30, 2012 the Company did not owe any money to FNIFP for these services. For the nine months ended June 30, 2012 and 2011, $6,000 and $7,000 of FNIFP’s fees has been allocated to cost of revenue and $13,000 and $14,000 have been allocated to general and administrative expenses, respectively

We have also entered into our Perpetual Licensing Agreement with FNIFP. As of June 30, 2012 no royalties under the licensing agreement have been paid.

Cobble Hill Interactive LLC (“CHI”)

Pursuant to a consulting agreement (the “Consulting Agreement”) dated January 1, 2012, the Company entered into an arrangement with CHI to provide certain client services and contractor management. The amounts of payment vary according to services provided. CHI is an entity owned by the Company’s Chief Executive Officer. For the nine months ended June 30, 2012 and 2011 the Company recorded $12,000 and $0, respectively for these various services. All costs have been applied to cost of revenue. For the nine months ended June 30, 2012 and 2011, $5,000 and $0 of CHI’s fees has been allocated to cost of revenue and $7,000 and $0 have been allocated to general and administrative expenses, respectively.At June 30, 2012 the Company did not owe any money to CHI for these services.

As part of the Private Placement which terminated on March 31, 2012, the Company paid the FINRA registered broker dealer (the “Placement Agent”) a cash fee of $3,000, and, issued 5,000 Series A and 2,500 Series B stock purchase warrants with terms the same as the Warrants issued to the investors. The Placement Agent is a company that is owned by the husband of the Company’s major shareholder.

Note 9. Subsequent Events

On July 24, 2012 the Company entered into a promissory note agreement (the “Note”) with a shareholder in the amount of $7,500. The Notes have semi-annual interest payments and mature in one year. The Notes carry a 12% interest rate. The Notes have no-prepayment penalty.

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.

Corporate History

On December 4, 2009 the business incorporated in the State of Delaware. On September 1, 2011, the Securities & Exchange Commission declared our Form S-1 filing effective and we became a reporting entity. In an effort to accelerate the current business plan, on December 29, 2011 an existing shareholder expanded his roles. Mr. Howard Kaplan became the Chief Executive Officer and Mr. William Schloth became Chief Financial Officer. Mr. Kaplan & Mr. Schloth also became Directors. As part of this transition, CFO Managed Fund I, LLC, an entity owned by the wife of Mr. Schloth, acquired all the share holdings of Craig Samuels and Mitch Metzman, the prior CEO and CFO, respectively, and Directors of the Company. On January 4, 2012, the Company changed its name from CWS Marketing & Finance Group Inc. to Ontarget360 Group Inc. On May 2, 2012, William Schloth, the Company’s director and interim chief financial officer resigned. There were no disagreements between Mr. Schloth and the Company. Mr. Schloth will continue to assist the Company with various financial and accounting activities. As soon as deemed required, the Company intends to hire a person to fill the Chief Financial Officer role and expand its Board of Directors.

Overview

We are an interactive marketing agency that provides people, processes and tools to help clients improve the results generated by their marketing efforts. The services include both interactive marketing optimization and website implementation services, including website design and technology support including point of purchase capabilities and driving website traffic. We deliver our services through both recurring subscription based arrangements and custom consulting projects. Where applicable, we also look to include performance-based compensation upside in agreements whereby we share in a customer’s incremental increases in revenue (“Revenue Sharing Arrangements”).

In August 2011 Forrester Research report, “US Interactive Marketing Forecast, 2011 to 2016,” it was noted that advertisers will spend as much on interactive marketing as they do on television advertising today. Investment in search marketing, display advertising, email marketing, mobile marketing and social media will near $77 billion and represent 35% of all advertising, as interactive channels gain legitimacy in the marketing mix. The US census bureau estimates that there are 30 million small and mid-size enterprises (“SMBs”) in the United States, and that market is forecasted to grow by 6 million new SMB’s annually. According to a Borrell Associates March 2011 report, it is estimated, that SMBs will spend $19.3 billion on web services

Our focus is on the SMB market that need to generate more revenue, and for whom the digital sales channel has been underutilized to date. Presently, we provide two lines of professional consulting services to the SMB marketplace: (i) interactive marketing optimization, and (ii) website implementation services, including website design and technology support including point of purchase capabilities and driving website traffic.

Using a comprehensive approach, we offer businesses a single point of entry to an array of effective, affordable online and expense management services that will help drive their business. The breadth and flexibility of our offering should allow us to address the interactive marketing and expense management needs of a wide variety of customers. Our longer-term objective is to become an application service provider, or ASP, therefore we plan to offer our customers an all-inclusive offering on an affordable subscription basis with simple and predictable pricing levels.

The Company’s initial activities focused on developing a delivery service model and establishing third party service providers that will enable the business to scale as the client base grows. Over the next twelve months, the Company plans to: increase new customer acquisitions through various traditional and internet marketing campaigns, develop a shareholder base and obtaining capital through sale of common stock, develop or acquire complementary services, technologies or intellectual property, strengthening our customer retention, refine a performance-based services and funding offering, form and enhance strategic third party business service provider and product reseller relationships, and, further develop the application service provider subscription-based delivery model.

Results of Operations

Summary of Key Results

For the unaudited three months ending June 30, 2012 and 2011

Revenues and Cost of Revenues

Total revenue for the three months ended June 30, 2012 and 2011, was $37,167 and $8,350, respectively, representing an increase of $28,817 or 345.1%.

Cost of revenues for the three months ended June 30, 2012 and 2011, were $19,884 and $2,000, respectively, representing an increase of $17,884 or 894.2%. The increase was due to additional revenue. Gross profit as a percentage of total revenue for the three months ended June 30, 2012 and 2011, was 46.5%, and 76.0%, respectively, representing and decrease of 29.5%. The decrease was due to increased independent contractor delivery work.

Operating Expenses

Total operating expenses for the three months ended June 30, 2012 and 2011, were $57,398 and $9,280 respectively, representing an increase of $48,118 or 518.5%. The increase was primarily due to more professional fees and sales and marketing efforts.

Other (Income)/Expenses

Total other expenses for the three months ended June 30, 2012 and 2011, were ($118) and $0, respectively. The decrease was the result of change in the fair value of a derivative liability offset by interest expense.

For the unaudited nine months ending June 30, 2012 and 2011

Revenues and Cost of Revenues

Total revenue for the nine months ended June 30, 2012 and 2011, was $62,817 and $21,700, respectively, representing an increase of $41,117 or 189.5%.

Cost of revenues for the nine months ended June 30, 2012 and 2011, were $30,409 and $7,000, respectively, representing an increase of $23,409 or 334.4%. The increase was primarily due to an increase in the number of clients. Gross profit as a percentage of total revenue for the nine months ended June 30, 2012 and 2011, was 51.6%, and 67.7%, respectively, representing a decrease of 16.1%. The decrease was due to increased independent contractor delivery work.

Operating Expenses

Total operating expenses for the nine months ended June 30, 2012 and 2011, were $90,411 and $32,374 respectively, representing an increase of $58,037 or 179.3%. The increase was primarily due to increased professional fees and sales and marketing efforts.

Other (Income)/Expenses

Total other expenses for the nine months ended June 30, 2012 and 2011, were $245 and $0, respectively. The increase was due to interest expense on a shareholder offset by the change in fair value of a derivative liability.

Liquidity and Capital Resources

As of June 30, 2012

From our inception on December 4, 2009 to June 30, 2012, we generated $112,917 in revenues.

At June 30, 2012, we had cash of $6,974 and a working capital deficit of $40,876. Since inception, we have raised $112,036 in equity capital and $26,500 in debt.

We had a total stockholders’ deficit of $40,876 and an accumulated deficit of $149,147 as of June 30, 2012.

We had $56,148 in net cash used in operating activities for the nine months ended June 30, 2012, which included $58,648 in net loss and $12,776 in stock based compensation.

We had $48,500 of net cash provided by financing activities for the nine months ended, of which $26,500 was a loan from a shareholder and $22,000 was raised in a private placement.

As part of a private placement memorandum dated February 5, 2012 (the “Private Placement”), we raised $25,000 through the issuance of restricted common stock. The amount has been reflected on the state of cash flow, net of $3,000 in broker dealer placement fees.

As of June 30, 2012, we did not have any fixed operating expenses. However, over the next twelve months we expect to hire employees both to deliver our services as well as perform other administrative and operating activities. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, we would need to either borrow funds from our officers or raise additional capital through equity or debt financings. We expect our current officers will be willing and able to provide such additional capital. However, we cannot be certain that such capital (from our officers or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial and operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.

Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is 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 will utilize our audit committee for the review of potential conflicts of interest.

With respect to shares issued for services, our board of directors determines the value of the services provided and authorizes the issuance of shares based upon the fair market value of our shares.

Off-Balance Sheet Arrangements

We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Critical Accounting Policies

Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts, inventory reserves and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.

Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Revenue Recognition

Marketing consulting service revenues

	●	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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company.

(a) Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are not effective to ensure that information required to be disclosed by us in report that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SECs”) rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in the Company’s Internal Controls Over Financial Reporting

Other than described above, there have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 5. OTHER

None

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 2. RECENT SALE OF UNREGISTERED SECURITIES

Stock-Based Compensation:

Private Placement:

As part of a private placement memorandum dated February 5, 2012 (the “Private Placement”), issued in reliance on Rule 506 of Regulation D under the Securities Act of 1933, the Company issued 50,000 shares of restricted common stock and 50,000 series A and 25,000 series B stock purchase warrants (the “Warrants”), to one investor for an investment of $25,000. The Series A and Series B Warrants may be exercised for $0.50, and $1.00, respectively. The Warrants expire in three years from issuance.

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.

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.

	ONTARGET 360 GROUP INC

Dated: August 11, 2012	By:	//Howard Kaplan
		Howard Kaplan
		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

//Howard Kaplan	Chief Executive Officer, Chief Accounting Officer & Chairman	August 11, 2012
Howard Kaplan

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