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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


 [x] Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act of 1934 for Quarterly Period Ended September 30, 2012


-OR-


[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities And Exchange Act of 1934 for the transaction period from _________ to________


Commission File Number      333-169732


Original Source Entertainment, Inc.

(Exact name of Registrant

in its charter)


Nevada

 

27-0863354

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification Number)


8201 South Santa Fe Drive #229, Littleton, CO

 

80120

(Address of Principal Executive Offices

 

(Zip Code)


Registrant's Telephone Number, Including Area Code:

 

(303) 495-3728


Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [x] No [ ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 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 [ ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerate filer, or a small reporting company as defined by Rule 12b-2 of the Exchange Act):




Large accelerated filer   [  ]

 

Non-accelerated filer             [  ]

Accelerated filer            [  ]

 

Smaller reporting company   [x]


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


The number of outstanding shares of the registrant's common stock, November 13, 2012:  Common Stock – 5,073,000


2





ORIGINAL SOURCE ENTERTAINMENT, INC.

FORM 10-Q

INDEX


PART 1 – FINANCIAL INFORMATION



 

 

Page

Item 1.  Financial Statements (Unaudited)

 

4

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

7

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

11

Item 4.  Controls and Procedures

 

12


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

 

13

Item 1A. Risk Factors

 

13

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

 

13

Item 3.  Defaults Upon Senior Securities

 

13

Item 4.  Mine Safety Disclosures

 

13

Item 5.  Other Information

 

13

Item 6.  Exhibits

 

13

 

 

 

SIGNATURES

 

14




3




ORIGINAL SOURCE ENTERTAINMENT, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS


 

Dec. 31, 2011

 

Sept. 30, 2012 (Unaudited)

ASSETS

 

 

 

Current assets

 

 

 

      Cash

 $13,851

 

 $  1,485

             Total current assets

13,851

 

 1,485

 

 

 

 

Total Assets

 $13,851

 

 $  1,485

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY

 

 

 

Current liabilities

 

 

 

      Related party payables

 $     952

 

 $     952

      Accrued interest payable

 176

 

 345

      Notes payable - current

 3,500

 

3,500

             Total current liabilities

  4,628

 

4,797

 

 

 

 

      Notes payable

12,500

 

 12,500

 

 

 

 

Total Liabilities

 17,128

 

 17,297

 

 

 

 

Stockholders' Equity

 

 

 

      Preferred stock, $.001 par value; 5,000,000 shares authorized; none issued and outstanding

   -

 

 -

      Common stock, $.001 par value; 45,000,000 shares authorized; 5,073,000 shares issued and outstanding

5,073

 

 5,073

      Additional paid in capital

 28,077

 

 28,077

      Deficit accumulated during the dev. stage

(36,427)

 

 (48,962)

 

 

 

 

Total Stockholders' Equity

   (3,277)

 

 (15,812)

 

 

 

 

Total Liabilities and Stockholders' Equity

 $13,851

 

 $    1,485


The accompanying notes are an integral part of the consolidated financial statements.


4




ORIGINAL SOURCE ENTERTAINMENT, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


 

Three Months Ended Sept. 30, 2011

 

Three Months Ended Sept. 30, 2012

 

Nine Months Ended Sept. 30, 2011

 

Nine Months Ended Sept. 30, 2012

 

Aug. 20, 2009 (Inception) through Sept. 30, 2012

Royalty revenue

 $      812

 

 $          23

 

 $    5,101

 

 $     561

 

 $   7,524

Cost of sales

   -

 

     -

 

  -

 

   -

 

 2,138

Gross profit

 812

 

  23

 

 5,101

 

  561

 

5,386

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

     General and administrative

 4,938

 

 4,754

 

 17,071

 

12,927

 

 54,003

 

 4,938

 

  4,754

 

17,071

 

 12,927

 

 54,003

 

 

 

 

 

 

 

 

 

 

Gain (loss) from operations

(4,126)

 

 (4,731)

 

 (11,970)

 

(12,366)

 

 (48,617)

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

     Interest expense

 (52)

 

  (49)

 

(120)

 

 (169)

 

 (345)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 (4,178)

 

 (4,780)

 

 (12,090)

 

 (12,535)

 

 (48,962)

 

 

 

 

 

 

 

 

 

 

Provision for income tax

    -

 

  -

 

  -

 

   -

 

-

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 $(4,178)

 

 $ (4,780)

 

 $(12,090)

 

 $ (12,535)

 

$(48,962)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

(Basic and fully diluted)

 (0.00)

 

 (0.00)

 

  (0.00)

 

  (0.00)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

4,555,333

 

4,500,000

 

  4,535,083

 

  4,500,000

 

 


The accompanying notes are an integral part of the consolidated financial statements.


5



ORIGINAL SOURCE ENTERTAINMENT, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Nine Months Ended Sept. 30, 2011

 

Nine Months Ended Sept. 30, 2012

 

Aug. 20, 2009 (Inception) Through Sept. 30, 2012

Cash Flows From Operating Activities:

 

 

 

 

Net income (loss) during the development stage

 $(12,090)

 

 $(12,535)

 

 $(48,962)

 

 

 

 

 

 

     Adjustments to reconcile net loss to net cash provided by (used for) operating activities:

 

 

 

 

 

         Related party payables

-

 

-

 

952

         Accrued payables

120

 

 169

 

345

         Compensatory stock issuances

-

 

 -

 

3,000

      Net cash provided by (used for) operating activities

 (11,970)

 

(12,366)

 

(44,665)

 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

-

 

 -

 

 -

      Net cash provided by (used for) investing activities

 -

 

 -

 

-

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

     Notes payable - borrowings

3,500

 

 -

 

16,000

     Sale of common stock

4,250

 

 -

 

30,150

        Net cash provided by (used for) financing activities

7,750

 

 -

 

 46,150

 

 

 

 

 

 

Net Increase (Decrease) In Cash

(4,220)

 

(12,366)

 

1,485

 

 

 

 

 

 

Cash At The Beginning Of The Period

 9,129

 

 13,851

 

-

Cash At The End Of The Period

 $ 4,909

 

 $   1,485

 

 $   1,485

 

 

 

 

 

 

Schedule Of Non-Cash Investing And Financing Activities

 

 

None

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure

 

 

 

 

 

Cash paid for interest

 $          -

 

 $            -

 

 $           -

Cash paid for income taxes

 $          -

 

 $            -

 

 $           -


The accompanying notes are an integral part of the consolidated financial statements.


6




ORIGINAL SOURCE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:


Original Source Entertainment, Inc. (the “Company”), was incorporated in the State of Nevada on August 20, 2009. The Company plans to license songs to the television and music industry for use in television shows or movies.


Basis of Presentation


The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.


Principles of consolidation


The accompanying consolidated financial statements include the accounts of Original Source Entertainment, Inc. and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.


Cash and cash equivalents


The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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.


7



Net income (loss) per share


The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.


Income tax


The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.


Revenue recognition


Revenue is recognized on an accrual basis after services have been performed under contract terms, the service price to the client is fixed or determinable, and collectability is reasonably assured.


Property and equipment


Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life.


Financial Instruments


The carrying value of the Company’s financial instruments, as reported in the accompanying balance sheet, approximates fair value.


Stock based compensation


The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.



8



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


Forward-looking Statements


Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operation, as well as in certain other parts of this quarterly report on Form

10-Q (as well as information included in oral statements or other written statements made or to be made by Original Source) that look forward in time, are forward-looking statements made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, expectations, predictions, and assumptions and other statements which are other than statements of historical facts. Although Original Source believes such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to, and are qualified by, known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by those statements. These risks, uncertainties and other factors include, but are not limited to Original Source’s ability to estimate the impact of competition and of industry consolidation and risks, uncertainties and other factors set forth in Original Source’s filings with the Securities and Exchange Commission, including without limitation to this Annual Report on Form 10-Q.


Original Source undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.


Critical Accounting Policies


The following discussion as well as disclosures included elsewhere in this Form 10-Q are based upon our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America.


The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies.  Original Source continually evaluates the accounting policies and estimates used to prepare the financial statements.  Original Source bases its estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.


9




Trends and Uncertainties


There are no material commitments for capital expenditure at this time.  There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on our limited operations. There are no known causes for any material changes from period to period in one or more line items of Original Source’s financial statements.


Liquidity and Capital Resources


At September 30, 2012, Original Source had a cash balance of $1,485, which represents a $12,366 decrease from the $13,851 balance at December 31, 2011.  The decrease was primarily the result of increased general and administrative expenses.


For the nine months ended September 30, 2012 and 2011, we did not pursue any investing activities.


For the nine months ended September 30, 2012, we did not pursue any financing activities.  For the nine months ended September 30, 2011, we received $3,500 from notes payable – borrowings and $4,250 from the sale of common stock, resulting in net cash provided by financing activities for the period of $7,750.  


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, Original Source has incurred losses of $12,366 and $4,220 for the nine months ended September 30, 2012 and 2011, respectively, and a working capital deficiency which raises substantial doubt about the Company’s ability to continue as a going concern.


Management believes the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever.  Management plans to seek additional debt and/or equity financing for the Company, but cannot assure that such financing will be available on acceptable terms.


The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve Original Source’s operating results.


Results of Operations for the three and nine months ended September 30, 2012 compared to the three and nine months ended September 30, 2011, and for the period from August 20, 2009 (Inception) through September 30, 2012.


10



For the three months ended September 30, 2012, we received royalty revenues of $23, had general and administrative expenses of $4,754 and interest expense of $49, resulting in a net loss of $4,780 for the period.


Comparatively, for the three months ended September 30, 2011, we received royalty revenues of $812, had general and administrative expenses of $4,938 and interest expenses of $52, resulting in a net loss of $4,178 for the period.


For the nine months ended September 30, 2012, we received royalty revenues of $561, had general and administrative expenses of $12,927, and had interest expense of $169, resulting in a net loss of $12,535 for the period.


Comparatively, for the nine months ended September 30, 2011, we received royalty revenues of $5,101, had general and administrative expenses of $17,071, and had interest expense of $120, resulting in a net loss of $12,090 for the period.


For the period from August 20, 2009 (Inception) through June 30, 2012, we received royalty revenues of $7,524 and had cost of sales of $2,138, resulting in a gross profit of $5,386.  We had general and administrative expenses of $54,003 and interest expense of $345, resulting in net loss of $48,962 for the period.


Management made continued efforts to reduce general and administrative expenses for the three and nine months ended September 30, 2012 and 2011, and for the period from August 20, 2009 (Inception) through September 30, 2012 due to the lack of revenue.


Recently Issued Accounting Standards


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


Off Balance Sheet Arrangements

None.  


Disclosure of Contractual Obligations

None.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk  


Not applicable for smaller reporting companies.   


11



Item 4.  Controls and Procedures  


During the three and nine months ended September 30, 2012, there were no changes in our internal controls over financial reporting (as defined in Rule 13a- 15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Evaluation of Disclosure Controls and Procedures  


Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2012.  Based on this evaluation, our chief executive officer and principal financial officers have concluded such controls and procedures to be effective as of September 30, 2012 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


12



PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

None  


Item 1A.  Risk Factors

Not applicable for smaller reporting companies  


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

None  


Item 3.   Defaults Upon Senior Securities.

None  


Item 4.   Mine Safety Disclosures

Not applicable


Item 5.   Other Information

None


Item 6.   Exhibits


    Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

    Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

    Exhibit 101.INS**  XBRL Instance Document

    Exhibit 101.SCH**  XBRL Taxonomy Extension Schema Document

    Exhibit 101.CAL**  XBRL Taxonomy Extension Calculation Linkbase Document

    Exhibit 101.DEF**  XBRL Taxonomy Extension Definition Linkbase Document

    Exhibit 101.LAB**  XBRL Taxonomy Extension Label Linkbase Document

    Exhibit 101.PRE**  XBRL Taxonomy Extension Presentation Linkbase Document

*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


13




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.  


Dated: November 13, 2012  


ORIGINAL SOURCE ENTERTAINMENT, INC.  


By: /s/Lecia L. Walker

Lecia L. Walker

Chief Executive Officer

Principal Financial Officer


14