Med One Oak, Inc. - FORM 10-Q - August 14, 2014

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2014

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____

Med One Oak, Inc.
(exact name of registrant as specified in its charter)

000-49999
(Commission File Number)
 

 
Delaware    90-0955160
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
                                                                                                                                 
9201 Pinecroft Drive, The Woodlands, Texas 77380
(Address of principal executive offices)

(281) 348-4020
Registrant’s telephone number including area code

Indicate by check mark whether the registrant (1) has 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 S­T (§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 x No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non­accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b­2 of the Exchange Act.
 
Large accelerated filer ¨     Accelerated filer ¨
Non­accelerated filer    ¨ (Do not check if a smaller reporting company)  Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b­2 of the Exchange Act).
 
Yes ¨ No x

As of August 12, 2014, the registrant had 2,609,911 of Common Stock at $0.001 par value outstanding.

 
 
 

MED ONE OAK, INC.

FORM 10­Q
Quarterly Period Ended June 30, 2014


 



CONDENSED BALANCE SHEETS
 
   
June 30, 2014
(Unaudited)
    
December 31, 2013
(Audited)
  
ASSETS
            
Cash
   $ 945     $ 84  
Receivables from clients, net
     215,541       242,646  
Receivables from related party, net
     38,420       28,827  
Unbilled receivables
     77,518       6,297  
Unbilled receivables from related party
     30,879       2,860  
Prepaid expenses
     2,825       2,825  
     Total current assets
     366,128       283,539  
                 
Total assets
   $ 366,128     $ 283,539  
                 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
                
Accounts payable
   $ 4,750     $ 4,181  
Accrued liabilities
     113,767       28,639  
Note payable to related party, current portion
     517,353       -  
     Total current liabilities
     635,870       32,820  
                 
Note payable to related party, less current portion
     -       456,752  
                 
Total liabilities
     635,870       489,572  
                 
Common stock subject to rescission rights, $0.001 par value
216 common shares issued and outstanding
     40,500       40,500  
                 
Commitments and Contingencies
     -       -  
                 
Shareholders’ deficit:
                
Preferred stock: $0.001 par value; 10,000,000 shares authorized; none issued and outstanding as of June 30, 2014 and December 31, 2013
     -       -  
Common stock: $0.001 par value; 150,000,000 shares authorized; 2,609,911 and 2,209,911 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively (includes shares subject to rescission rights)
     2,610       2,210  
   Additional paid in capital
     1,915,524       1,912,507  
   Accumulated deficit
     (2,228,376 )     (2,161,250 )
Total shareholders' deficit
     (310,242 )     (246,533 )
                 
Total liabilities and shareholders’ deficit
   $ 366,128     $ 283,539  
 
The accompanying notes are an integral part of these condensed financial statements.


UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 
   
Three months ended June 30,
    
Six months ended June 30,
  
   
2014
    
2013
    
2014
    
2013
  
Revenues
                        
        Services revenue
   $ 310,792     $ -     $ 468,470     $ -  
        Services revenue – related party
     86,264       184,262       144,755       361,230  
                      Total revenues
     397,056       184,262       613,225       361,230  
Direct cost of revenues                                
Cost of services
     296,400       -       446,790       -  
Cost of services – related party
     83,752       178,896       140,540       350,709  
                      Total direct cost of revenues
     380,152       178,896       587,330       350,709  
                                 
Operating expenses
                                
    General and administrative expenses
     44,817       32,173       83,663       173,567  
                                 
Loss from operations     (27,913 )     (26,807 )     (57,768)        (163,046)   
                                 
Other income (expenses)
                                
        Interest expense
     -       (695 )     -       (835 )
        Interest expense – related party
     (5,274 )     (614 )     (9,358 )     (1,126 )
                      Total other expenses
     (5,274 )     (1,309 )     (9,358 )     (1,961 )
                                 
Loss before income tax expense
     (33,187 )     (28,116 )     (67,126 )     (165,007 )
Income tax expense
     -       -       -       -  
Net loss   $ (33,187)     $ (28,116)     $ (67,126)     $ (165,007)  
                                 
Basic and diluted net loss per common share
   $ (0.01 )   $ (0.01 )   $ (0.03 )   $ (0.08 )
Basic and diluted weighted average common shares outstanding, including common shares subject to rescission rights
     2,609,911       2,209,911       2,609,911       2,194,421  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Six months ended June 30,
  
   
2014
    
2013
  
             
OPERATING ACTIVITIES:
            
Net loss
  
$
(67,126
)
  
$
(165,007)
  
Adjustments to reconcile net loss to net cash provided by (used in) operations:
                
     Stock based compensation
    
3,417
      
8,000
  
     Non-cash charges to operations, net
    
493,077
      
19,764
  
Changes in operating assets and liabilities:
                
     Accounts receivable
    
17,512
      
-
  
     Unbilled accounts receivable
    
(99,240
)
    
-
  
     Prepaid expense
    
-
      
15,000
  
     Accounts payable and accrued liabilities
    
85,697
      
99,106
  
Net cash provided by (used in) operations
    
433,337
      
(23,137)
  
                 
FINANCING ACTIVITIES:
                
Proceeds from note payable to related party
    
19,000
      
49,800
  
Repayment of note payable to related party
    
(451,476)
      
(22,010)
  
Net cash (used in) provided by financing activities
    
   (432,476)
      
27,790
  
                 
Increase in cash and cash equivalents
    
861
      
4,653
  
Cash and cash equivalents, beginning of period
    
84
      
-
  
Cash and cash equivalents, end of period
  
$
945
    
$
4,653
  
               
Supplemental disclosures of cash flow information:
                
Interest paid
  
$
-
    
$
748
  
Income taxes paid
  
$
-
    
$
-
  
                 
Non-cash items:
                
Common stock issued to satisfy payable to related party
  
$
-
    
$
125,225
  
Insurance paid with premium financing obligation
  
$
-
    
$
40,000
  
Shares issued to executives
  
$
400
    
$
800
  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2014

NOTE 1 – DESCRIPTION OF BUSINESS

Med One Oak, Inc. (“Med One,” “we”, or the “Company”) was originally incorporated as Rolfe Enterprises, Inc. under the laws of the state of Florida on May 6, 1996, as a “blind pool” or “blank check” company whose business plan was to seek to acquire a business opportunity through completion of a merger, exchange of stock, or other similar type of transaction. We commenced operations during 2003, with our principal operations consisting of e-commerce marketing and retailing, and we were reincorporated on April 12, 2004 in the state of Delaware as BidGive International, Inc.

On March 31, 2011, we sold our operations. We recommenced operations in 2013, with our principal operations consisting of operational and financial consulting services. We help clients improve performance, comply with complex regulations, strategically grow their business, expand their operations into new markets, market their service and product offerings, streamline operations, and reduce costs. Our professionals employ their expertise in healthcare administration, management, finance and operations to provide our clients with specialized analyses and customized advice and solutions that are tailored to address each client’s particular challenges and opportunities. Since 2013, we have primarily provided business-consulting services to financially sound organizations in the healthcare industry in and around Houston, Texas.

Liquidity

The Company’s financial statements are prepared using U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

During the three and six months ended June 30, 2014, the Company recognized revenue of $397,056 and $613,225, respectively, from providing management consulting services. The Company has historically incurred net losses, which have resulted in an accumulated deficit of $2,228,376 at June 30, 2014. The Company incurred net losses of $33,187 and $28,116 for the three months ended June 30, 2014 and 2013, respectively.  The Company incurred net losses of $67,126 and $165,007 for the six months ended June 30, 2014 and 2013, respectively.

The Company’s operations provided $433,337 and used $23,137 of cash during the six months ended June 30, 2014 and 2013, respectively, and the Company had cash of $945 and $84 at June 30, 2014 and December 31, 2013, respectively. The Company funded cash needs during the quarter ended June 30, 2014 with advances on a Promissory Note (the “Note”) to a related party, entered into on January 1, 2013, whereby the Company has the ability to draw up to $1,500,000 for working capital purposes. At June 30, 2014, the outstanding balance on the Note was $503,332, with accrued interest of $14,021, and is payable in full on January 31, 2015. Management believes that the approximate $997,000 available under this Note is sufficient to sustain its current level of operations. However, growth of operations or acquisition of business or assets is dependent upon the Company’s ability to raise additional capital through the issuance of additional debt and/or equity securities, of which our ability to do so on favorable terms is uncertain.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).
 
 
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Financial Statements and accompanying disclosures. Actual results may differ significantly from these estimates and assumptions.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, the related services are provided, the price is fixed or determinable and collectability is reasonably assured. We generate the majority of our revenues from providing professional services under three types of billing arrangements: time-and-expense, fixed-fee and performance-based. If at the outset of an arrangement we determine that the arrangement fee is not fixed or determinable, revenue is deferred until all criteria for recognizing revenue are met.

Time-and-expense billing arrangements require the client to pay based on the number of hours worked by our revenue-generating professionals at contractually agreed-upon rates. We recognize revenues for our professional services rendered under time-and-expense engagements based on the hours incurred at agreed-upon rates as work is performed.

In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to pay a fixed-fee every month over the specified contract term. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term. We recognize revenues for our professional services rendered under these fixed-fee billing arrangements monthly over the specified contract term or, in certain cases, revenue is recognized on the proportional performance method of accounting based on the ratio of labor hours incurred to estimated total labor hours, which we consider to be the best available indicator of the pattern and timing in which such contract obligations are fulfilled.

In performance-based or contingent billing arrangements, fees are tied to the attainment of contractually defined objectives. Often this type of arrangement supplements a time-and-expense or fixed-fee engagement, where payment of a performance-based fee is deferred until the conclusion of the matter or upon the achievement of performance-based criteria. We do not recognize revenues under performance-based billing arrangements until all related performance criteria are met and collection of the fee is reasonably assured.

Provisions are recorded for the estimated realization adjustments on all engagements. Reimbursable expenses, including those relating to travel, out-of pocket expenses, and other similar costs, are generally included in revenues, and an equivalent amount of reimbursable expenses is included in direct costs of revenues in the period in which the expense is incurred. Any taxes assessed on revenues relating to services provided to our clients are recorded on a net basis.
 
Differences between the timing of billings and the recognition of revenue are recognized as either unbilled receivables or deferred revenues in the Balance Sheet. We hold retainers on deposit until we have completed the work. We generally apply these retainers to final billings and refund any excess over the final amount billed to clients, as appropriate, when we complete our work.

Direct Cost of Revenues

Direct cost of revenues consists primarily of billable employee compensation and related payroll benefits and direct expenses billable to clients. Direct cost of revenues does not include an allocation of overhead costs.

Allowance for Doubtful Accounts and Unbilled Receivables

We maintain allowances for doubtful accounts and for services performed but not yet billed based on several factors, including the estimated cash realization from amounts due from clients, an assessment of a client’s ability to make required payments, and the historical percentages of fee adjustments and write-offs. The allowances are assessed by management on a regular basis.


We record the provision for doubtful accounts and unbilled receivables as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client’s inability to make required payments on accounts receivables, we record the provision in selling, general and administrative expenses.

During the three and six months ended June 30, 2014 and 2013, we recorded provisions for doubtful accounts and unbilled receivables of $0. At June 30, 2014 and December 31, 2013 our accounts receivable and unbilled receivables totaled $362,358 and $280,630, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. Such cash equivalents generally are part of the Company’s cash management activities rather than part of its operating, investing, and financing activities. The Company had cash and cash equivalents of $945 and $84 at June 30, 2014 and December 31, 2013, respectively.

Fair Value of Financial Instruments

The carrying amount of our cash and cash equivalents, receivables from clients, notes and accounts payable approximates fair value because of the short maturity and liquidity of those instruments.

Fair Value Measurement

Financial assets and liabilities recorded in the accompanying Balance Sheets are categorized based on the inputs in the valuation techniques as follows:

    Level 1— Financial assets and liabilities whose values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the
       measurement date.
    Level 2— Financial assets and liabilities whose values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
    Level 3— Financial assets and liabilities whose values are based on unobservable inputs for the asset or liability.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk primarily include accounts receivable. Accounts receivable at June 30, 2014 consisted of amounts due from health care entities located in the Houston, Texas metropolitan area, for management consulting services provide by the Company.

To the extent receivables from clients become delinquent, collection activities commence. The allowances for doubtful accounts and unbilled services are based upon the expected ability to collect accounts receivable, and bill and collect unbilled receivables. The Company believes its allowance for doubtful accounts adequately provides for estimated losses as of June 30, 2014 and December 31, 2013.

Stock-Based Compensation

The Company accounts for all stock-based compensation arrangements using a fair value method and records such expense on a straight-line basis over the vesting period, net of our estimated amount of expected forfeitures.
 
 
Income Taxes
 
Deferred tax assets and liabilities are determined using the asset and liability method in accordance with the guidance on income taxes. Under this method, deferred tax assets and liabilities are established for future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that such net deferred tax assets will not be realized. We recognize the impact of an uncertain tax position only if that position is more likely than not of being sustained upon examination by the taxing authority based on its technical merits. We account for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary.

Basic and Diluted Net Loss Per Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the diluted weighted average number of common shares excludes common stock equivalents because their inclusion would be anti-dilutive.

Recent Accounting Pronouncements

The Company has implemented all accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 – RELATED PARTY TRANSACTIONS

Note Payable to Related Party

On January 1, 2013, the Company entered into the Note as borrower in favor of a related party with indirect ownership of the Company (the “Related Party”) whereby the Company has the right to draw up to $1,500,000 from the Related Party, with such draws to be used for working capital purposes. The Note accrues interest at a rate of 4.25% per annum.

The principal and all accrued and unpaid interest is payable either in the form of cash or shares of common stock, as agreed upon mutually. If repayment shall be in shares of common stock, the number of shares payable will be determined based upon the then fair market value of the common stock. At any time while not in default, the Company may prepay the outstanding principal and interest without penalty. The Note is secured by the assets of the Company with first lien rights to the Related Party.

The original maturity date of the Note was September 30, 2013. On September 27, 2013, the Note was amended to extend the maturity date to January 31, 2015. Accordingly, the outstanding balance of the Note is classified as current on the accompanying Balance Sheet as of June 30, 2014.

At June 30, 2014, $517,353 was outstanding on the Note, including accrued interest. Following is a summary of transactions with the Related Party that resulted in advances on or repayments of the Note during the six months ended June 30, 2014.
 
Outstanding, December 31, 2013
   $ 456,752  
Cash advances
     19,000  
Noncash advances (1)
     561,379  
Cash payments (2)
     (451,476 )
Executive consulting services provided
     (77,660 )
Accrued interest
     9,358  
   Outstanding, June 30, 2014
   $ 517,353  
 

(1)
During the six months ended June 30, 2014, the Related Party provided noncash advances comprised of direct payment of $4,500 for the Company’s office rent and $556,879, respectively, for other operating expenses. The Company rents corporate office space on a month-to-month basis from the Related Party for $1,000 per month, beginning April 1, 2014.
 
(2(2)
During the six months ended June 30, 2014, our Executives provided management consulting services to the Related Party for actual time incurred providing such services. During the six months ended June 30, 2014, the Company recognized gross profits from providing these services of $4,215. The Company expects to continue these consulting services up until a time when the Company acquires significant assets or operations. 

NOTE 4 – STOCKHOLDERS’ EQUITY

Common Stock Issued to Executives

On November 21, 2012, the Company entered into Restricted Stock Agreements (“RSAs”) with Ivan Wood, Jr. (“Wood”) and Pamela J. Roth (“Roth”), collectively the “Executives”, whereby Wood and Roth were granted 1,100,000 and 500,000 shares of Common Stock, respectively, collectively referred to as the “Executive Shares”. The RSAs provide that the Executive Shares acquired by each Executive shall not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated for a period of 18 months after the vesting of such shares and that the Company shall retain possession of the certificates representing the Executive Shares until such time as the restriction shall have lapsed.

The Executive Shares were granted in a private transaction under an exemption from registration contained in Section 4(2) of the Securities Act of 1933, in exchange for services to be provided by the Executives to the Company and were fair valued at $64,000, which was the fair market value of the shares at the time of grant. Subject to certain exceptions set forth in the RSAs, the Executive Shares vest to each of the Executives on the following schedule: 50% of such shares vested and were issued to the two individuals upon their employment with the Company as executives on January 1, 2013; 25% of such shares vested and were issued to the two individuals on January 1, 2014; and the remaining 25% of the total shares vest subject to continued executive employment on January 1, 2015.

On January 1, 2013 and January 1, 2014, the Company issued 800,000 and 400,000 Executive Shares, respectively, pursuant to the RSA vesting schedule. Due to Wood’s resignation on February 2, 2014, only 125,000 additional shares will vest on January 1, 2015, subject to Roth’s continued employment.

During the three and six months ended June 30, 2014, the Company recognized stock-based compensation expense of $1,250 and $3,417, respectively. During the three and six months ended in June 30, 2013, the Company recognized stock-based compensation expense of $4,000 and $8,000, respectively. At June 30, 2014, approximately $2,500 of stock-based compensation expense remains unrecognized and will be ratably recognized over the next six months, subject to Roth’s continued employment.

Common Stock Subject to Rescission Rights

During 2004, the Company issued 216 (post-split) shares of Common Stock in a private placement for $40,500, after filing a registration statement on Form SB-2 with the Securities and Exchange Commission. These shares were issued in reliance upon claimed exemptions from registration, which, in retrospect, may not be available. As a result, the purchasers of these shares may have rescission rights for recovery of the purchase price paid for the shares with interest. Accordingly, $40,500 has been recorded as “common stock subject to rescission rights” on the accompanying Consolidated Balance Sheets. Interest to be paid contingent upon the possibility of rescission is considered immaterial.


Preferred Stock

Our board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock, par value $0.001, in one or more series and to designate the rights, preferences, privileges and restrictions of each series. The issuance of preferred stock could have the effect of restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock or delaying or preventing our change in control without further action by the stockholders. At June 30, 2014 and December 31, 2013, no shares of Preferred Stock were issued or outstanding.

NOTE 5 – INCOME TAXES

No provision for federal income taxes has been recognized for the three and six months ended June 30, 2014 and 2013 as the Company incurred a net operating loss for income tax purposes in each period and has no carryback potential.

Deferred tax assets and liabilities at June 30, 2014 and December 31, 2013 totaled a net deferred tax asset before valuation allowance of $583,942 and $561,156, respectively, and consisted primarily of a deferred tax asset resulting from a net operating loss carryforward.

The Company has provided a full valuation allowance for the net deferred tax assets as it is deemed more likely than not that these assets will not be realized due to lack of positive evidence to suggest otherwise. The valuation allowance increased, $22,785 for the six months ended June 30, 2014. The Company’s effective tax rate differs from the statutory rate of 35% primarily due to the change in valuation allowance and stock-based compensation.

At June 30, 2014, the Company had net operating loss carryforwards of approximately $1.7 million for federal income tax purposes, which may be offset against future income through 2032, but due to current tax laws the amount of loss available to be offset against future taxable income will be limited due to significant changes in the Company’s ownership.

The Company’s federal income tax returns for the years ended 2009 through 2012 are open to examination. At June 30, 2014 and December 31, 2013, the Company evaluated its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. For the three and six months ended June 30, 2014 and 2013, we recorded no interest expense and penalties related to unrecognized tax benefits associated with uncertain tax positions.
 

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the Company's Condensed Financial Statements and related Notes.

Disclaimer Regarding Forward­Looking Statements

Certain statements in this quarterly report on Form 10­Q are what are known as “forward­looking statements,” which are basically statements about the future. For that reason, these statements involve risk and uncertainty since the future cannot be accurately predicted. Words such as “plans,” “intends,” “hopes,” “seeks,” “anticipates,” “expects,” and the like often identify such forward­looking statements, but are not the only indication that a statement is a forward­looking statement. Such forward­looking statements include statements concerning our plans and objectives with respect to our present and future operations, and statements that express or imply that such present and future operations will or may produce revenues, income or profits. In evaluating these forward­looking statements, you should consider various factors that may cause our actual results to differ materially from any forward­looking statement. We caution you not to place undue reliance on these forward­looking statements.

 
Although we base these forward­looking statements on our expectations, assumptions and projections about future events, actual events and results may differ materially, and our expectations, assumptions and projections may prove to be inaccurate. The forward­looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward­looking statements to reflect events or circumstances after the date of this filing. Forward­looking statements reflect the current view of management with respect to future events and are subject to numerous risks, uncertainties and assumptions. We can give no assurance that such expectations will prove to be correct. Should any one or more of such risks or uncertainties materialize or should any underlying assumptions prove incorrect, actual results are likely to vary materially from those described in this Form 10­Q. There can be no assurance that the projected results will occur, that these judgments or assumptions will prove correct or that unforeseen developments will not occur. We are under no duty to update any of the forward­looking statements after the date of this Form 10­Q.

Overview

Our operations consist of providing management consulting services, primarily to healthcare entities located in Houston, Texas and the surrounding area, and working towards effecting one or more transactions to acquire or purchase assets and/or operations in the health care industry. During the three and six months ended June 30, 2014 we earned revenue of $397,056 and $613,225, respectively, from management consulting services. During the three and six months ended June 30, 2013, we earned revenue of $184,262 and $361,230, respectively from management consulting services.

We are currently evaluating several opportunities to acquire assets or operations of healthcare entities located in the Houston, Texas metropolitan area. However, there can be no assurance that we will be able to successfully implement our plan of acquisition. Until a transaction is effectuated, we will continue to offer management consulting services to offset a portion of our operating costs. We expect to continue to incur moderate losses each quarter until a transaction considered appropriate by management is effectuated.
Any acquisition or asset purchase we effectuate may involve:

 
·
a material change in the Company’s present capitalization;
 
·
a material change in the composition of the Company’s Board of Directors;
 
·
the issuance of a significant amount of the Company’s securities;
 
·
the acquisition of significant assets; and/or
 
·
a significant change in operations.
 
Our operations following consummation of a transaction will be dependent on the nature of the transaction. There may also be various risks inherent in the transaction, the nature and magnitude of which cannot be predicted. We may also be subject to increased governmental regulation following a transaction; however, it is not feasible at this time to predict the nature or magnitude of such increased regulation, if any.

Results of Operations

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition for the three and six months ended June 30, 2014. The following discussion should be read in conjunction with the Condensed Financial Statements and related Notes appearing elsewhere in this Form 10­Q.

Three Months Ended June 30, 2014 and 2013

Services Revenues
Services revenues increased by $212,794, or 115.5% to $397,056 for the three months ended June 30, 2014 compared to $184,262 for the prior year period and consisted of revenue from management consulting services provided to three healthcare companies located in Houston, Texas, one of which is a related party. Revenues from services provided to the related party decreased by $97,998 to $86,264 for the three months ended June 30, 2014, compared to $184,262 for the prior year period.
 
 
Cost of Services
Cost of services increased by $201,256, or 112.5%, to $380,152 for the three months ended June 30, 2014 compared to $178,896 for the prior year period. Cost of services during the current quarter consisted of direct costs of providing management consulting services. Cost of services provided to the related party decreased by $95,144 to $83,752 for the three months ended June 30, 2014, compared to $178,896 for the prior year period.

Operating Expenses
Operating expenses, consisting of general and administrative expenses, increased $12,644, or 39.3%, to $44,817 for the three months ended June 30, 2014 compared to $32,173 for the three months ended June 30, 2013. The increase is attributable to increases in: legal fees of $8,680, salaries and benefits of $8,804 and other general and administrative costs of $4,840.

Other Expenses
Other expenses totaled $5,274 and $1,309 for the three months ended June 30, 2014 and 2013, respectively, and consisted of interest expense of $5,274 and $986, respectively, related to the Note and $323 related to the financing of Directors & Officers insurance during the three months ended June 30, 2013.  The increase was due to a higher average outstanding principal balance.
 
Net Loss
Our net loss for the three months ended June 30, 2014 was $33,187 compared to $28,116 for the three months ended June 30, 2013. The increase in net loss was directly attributable to the items discussed above.

Six Months Ended June 30, 2014 and 2013

Services Revenues
Services revenues increased by $251,995, or 69.8%, to $613,225 for the six months ended June 30, 2014 compared to $361,230 for the prior year period and consisted of revenue from management consulting services provided to three healthcare companies located in Houston, Texas, one of which is a related party.  Revenues provided to the related party totaled $144,755 for the six months ended June 30, 2014.

Cost of Services
Cost of services increased $236,621, or 67.5%, to $587,330 for the six months ended June 30, 2014 compared to $350,709 for the prior year period.  Cost of services during this current six month period consisted of direct costs of providing management consulting services.  Cost of services provided to the related party decreased by $210,169 to $140,540 for the six months ended June 30, 2014, compared to $350,709 for the prior period.

Operating Expenses
Operating expenses, consisting of general and administrative expenses, decreased $89,904, or 51.8%, to $83,663 for the six months ended June 30, 2014 compared to $173,567 for the prior year period.  The decrease is attributable to decreases in: legal fees of $44,244, accounting fees of $2,500, acquisition costs of $25,917, and other general and administrative costs of $5,253.

Other Expenses
Other expenses totaled $9,358 and $1,961 for the six months ended June 30, 2014 and June 30, 2013, respectively, and consisted of interest expense of $9,358 and $1,126, respectively, related to the Note, and $835 related to the financing of Directors & Officers insurance during the six months ended June 30, 2013.  The increase was due to a higher outstanding principal balance.

Net Loss
Our net loss for the six months ended June 30, 2014 was $67,126 compared to $165,007 for the prior year period.  The decrease in net loss was directly attributable to the items discussed above.
 
 
Liquidity and Capital Resources

At June 30, 2014 and December 31, 2013 our cash was $945 and $84, respectively.  We had a working capital deficit of ($269,742) at June 30, 2014 compared to working capital of $250,719 at December 31, 2013.  On January 1, 2013, the Company executed the Note, under which the Company has the right to draw up to $1,500,000 for working capital purposes. At June 30, 2014, the outstanding balance on the Note was $517,353, including accrued interest of $14,021, and is payable in full on January 31, 2015.

During the six months ended June 30, 2014, cash provided by operations totaled $433,337, compared to cash used in operations of $(23,137) for the comparable prior year period. Cash from investing activities was $0 for the six months ended June 30, 2014 and 2013. During the six months ended June 30, 2014, cash used in financing activities was $(432,476), consisting of repayments of $451,476 on a note payable to a related party and advances from a related party of $19,000, compared to cash provided by financing activities of $27,790 for the comparable prior year period, consisting of proceeds from related party contributions offset by repayments of a note payable to a related party.

At June 30, 2014, we had no material commitments for capital expenditures and our operations currently consist of working towards effecting one or more transactions to acquire or purchase assets and/or operations from healthcare entities located in the Houston, Texas Metropolitan Area. While the Company is working toward effecting such transactions, the officers of the Company are providing management consulting services to entities in the healthcare industry that are also located in Houston, Texas and surrounding areas. During the three and six months ended June 30, 2014, we earned revenue of $397,056 and $613,225, respectively from these management-consulting services.

Although we are currently evaluating several opportunities to acquire assets or business operations, there can be no assurance that we will be able to successfully implement our plan of acquisition. Until a transaction is effectuated, we will continue to offer management consulting services to offset a portion of our operating costs resulting in us incurring moderate operating losses during that period.

Until we are able to implement our acquisition plan and recognize positive cash flow from operations, we plan to fund our working capital needs using funds from the Note that we issued to a related party on January 1, 2013, whereby we have the ability to draw up to $1,500,000 to pay ongoing operating expenses. The Note matures on January 31, 2015 and can be settled in either cash or shares of Common Stock at maturity, for both the outstanding principle amount and accrued interest. We believe that the approximate $997,000 remaining availability under the Note is sufficient to sustain our current level of operations for a reasonable period of time. However, growth of operations or acquisition of business or assets will be dependent upon our ability to issue additional debt and/or equity securities.

Our primary cash requirement is paying our operating expenses and servicing our debt. Our primary cash source is from consulting services and advances on the Note to a related party, and our primary use of cash is to fund operations.

Off­-Balance Sheet Arrangements

We do not have any off­balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


We are a smaller reporting company as defined by Rule 12b­2 of the Exchange Act and are not required to provide the information required under this item.


 

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

As required by Rules 13a­15(b) and 15d­15(b) of the Exchange Act, an evaluation as of June 30, 2014 was conducted under the supervision and with the participation of our principal executive and principal financial officers of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a­15(e) and 15d­15(e) under the Exchange Act). Based on this evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our principal executive and principal financial officers also concluded that our disclosure controls and procedures were effective as of June 30, 2014, to provide reasonable assurance of the achievement of these objectives.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



None.


We are a smaller reporting company as defined by Rule 12b­2 of the Exchange Act and are not required to provide the information required under this item.


None.


None.


Not applicable.


None.

 

The following exhibits are filed as part of this Quarterly Report. For convenient reference, each exhibit is listed according to the Exhibit Table of Item 601 of Regulation S­K.
 
Exhibit
Number                 Description
3.1
Certificate of Incorporation of BidGive International, Inc. (filed as Exhibit 3 to the Company's Preliminary Information Statement on Schedule 14C filed on March 12, 2004, and incorporated herein by reference).
 
3.2
Bylaws of BidGive International, Inc. (filed as Exhibit 3 to the Company's Preliminary Information Statement on Schedule 14C filed on March 12, 2004, and incorporated herein by reference).
 
3.3
Certificate of Ownership and Merger of Parent into Subsidiary filed with the Delaware Secretary of State on April 12, 2004 (filed as Exhibit 3.3 to the Company’s Form 10­K filed February 8, 2013, and incorporated herein by reference).
 
3.4
Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on December 18, 2009 (filed as Exhibit 3.4 to the Company’s Form 10­K filed February 8, 2013, and incorporated herein by reference).
 
3.5
Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on October 23, 2012 (filed as Exhibit 3.5 to the Company’s Form 10­K filed February 8, 2013, and incorporated herein by reference).
 
3.6
Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on January 31, 2013 (filed as Exhibit 3.5 to the Company’s Form 10­K filed February 8, 2013, and incorporated herein by reference).
 
10.1
Executive Employment Agreement entered into by and between Med One Oak, Inc. and Ivan Wood, Jr. effective as of January 1, 2013 (filed as Exhibit 10.1 to the Company’s Form 8­K filed January 7, 2013, and incorporated herein by reference).
 
10.2
Executive Employment Agreement entered into by and between Med One Oak, Inc. and Pam Roth effective as of January 1, 2013 (filed as Exhibit 10.2 to the Company’s Form 8­K filed January 7, 2013, and incorporated herein by reference).
 
10.3
Promissory Note entered into on January 1, 2013 by and between the Company as borrower in favor of Greater Houston Physician Medical Association, PLLC, (filed as Exhibit 10.3 to the Company’s Form 8­K filed January 7, 2013, and incorporated herein by reference).
 
31.1 *
Certification of Chief Executive Officer Pursuant to Rule 13a­14(a) and15d­14(a) under the Securities Exchange Act of 1934, as amended.
 
31.2 *
Certification of Chief Financial Officer Pursuant to Rule 13a­14(a) and15d­14(a) under the Securities Exchange Act of 1934, as amended.
 
32.1 *
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
   
32.2 *
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
   
101.INS**
XBRL Instance Document
   
101.SCH**
XBRL Taxonomy Extension Schema
   
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase
   
101.LAB**
XBRL Taxonomy Extension Label Linkbase
   
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase
________
 
*Filed herewith.

 
**Pursuant to Rule 406T of Regulation S­T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

MED ONE OAK, INC.

Dated: August 14, 2014
By: /s/ Chase Chandler
   
 
Chief Executive Officer and President
 
(Principal Executive Officer)
   
 

Dated: August 14, 2014
By: /s/ Pamela J. Roth
   
 
Chief Financial Officer
 
(Principal Financial Officer)
   
 
 
15
 

Med One Oak, Inc. Reports

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