Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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ACT OF 1934
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For the nine months ended September 30, 2016.
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OR
☐
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period
from
to .
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Commission file number: 333-209836
Results-Based Outsourcing Inc.
(Exact name of registrant in its charter)
Delaware
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32-0416399
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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WeWork Commons, South Station, 745 Atlantic Ave
Boston MA
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02111
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(Address of principal executive offices)
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(Zip Code)
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Issuer’s telephone number: 203.635.7600
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001
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.
[X] Yes [ ]
No
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Yes [
] No [ ]
(Does
not currently apply to the Registrant)
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, 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
Accelerated
filter
Non-accelerated
filter
(Do not check if a
smaller reporting company)Smaller reporting company
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes __ No X
State the number of shares outstanding of each of the
issuer’s classes of common equity, as of the latest
practicable date.
Class
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Outstanding November 14, 2016
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Common Stock, $0.0001 par value per share
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4,107,000
shares
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TABLE OF CONTENTS
PART
I
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FINANCIAL
INFORMATION
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1
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ITEM
1.
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INTERIM FINANCIAL
STATEMENTS
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1
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ITEM
2.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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2
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ITEM
3.
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QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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5
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ITEM
4.
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CONTROLS AND
PROCEDURES
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5
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ITEM
5.
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OTHER
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5
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PART
II
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OTHER
INFORMATION
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6
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ITEM
1.
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LEGAL
PROCEEDINGS
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6
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ITEM
1A.
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RISK
FACTORS
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6
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ITEM
2.
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UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
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6
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ITEM
3
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DEFAULTS UPON
SENIOR SECURITIES
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6
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ITEM
4
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SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
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6
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ITEM
5
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OTHER
INFORMATION
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6
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ITEM
6
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EXHIBITS
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6
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SIGNATURES
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7
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1
PART I. Financial Information
Item 1. Interim Financial Statements.
Condensed
Balance Sheets as of September 30, 2016 and December 31,
2015
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F-1
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Condensed
Statements of Operations for the three and nine months ended
September 30, 2016 and 2015
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F-2
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Condensed
Statements of Changes in Stockholders’ Equity (Deficit) for
the nine months ended September 30, 2016
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F-3
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Condensed
Statements of Cash Flows for the nine months ended September 30,
2016 and 2015
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F-4
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Notes
to Condensed Financial Statements
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F-5
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RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS
INC) CONDENSED BALANCE
SHEETS
AS OF SEPTEMBER 30, 2016 (UNAUDITED) AND DECEMBER 31
2015
ASSETS
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September
30,
2016
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December
31,
2015
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CURRENT
ASSETS:
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Cash
or cash equivalents
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775
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4,953
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Accounts
receivable
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4,000
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-
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Due
from shareholder
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-
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13,000
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Prepaid
expenses
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-
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5,000
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TOTAL
CURRENT ASSETS
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4,775
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22,953
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Fixed assets,
net
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2,275
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3,250
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TOTAL
ASSETS
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7,050
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26,203
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LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
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CURRENT
LIABILITIES:
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Accounts
payable and accrued expenses
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15,929
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11,691
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Due
to shareholder
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9,250
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Accrued
taxes
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250
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250
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TOTAL
CURRENT LIABILITIES
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25,429
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11,941
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TOTAL
LIABILITIES
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25,429
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11,941
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STOCKHOLDERS'
EQUITY (DEFICIT):
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Preferred stock,
$.0001 par value, 15,000,000 shares authorized,
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none
issued and outstanding
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-
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-
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Common
stock, $.0001 par value, 75,000,000 shares authorized,
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and
4,107,000 and 4,025,000 shares issued and outstanding,
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as
of September 30, 2016 and December 31, 2015,
respectively
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411
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403
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Additional
paid-in capital
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36,730
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35,098
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Retained
deficit
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(55,520)
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(21,239)
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TOTAL
STOCKHOLDERS' EQUITY (DEFICIT)
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(18,379)
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14,262
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TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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7,050
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26,203
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The
accompanying notes to financial statements are
an
integral part of these statements.
F-1
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS
INC) CONDENSED STATEMENTS OF
OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(UNAUDITED)
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Three Months
Ended Sept 30, 2016
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Three Months
Ended Sept 30, 2015
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Nine
Months Ended Sept 30, 2016
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Nine
Months Ended Sept 30, 2015
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Revenues:
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Professional
service revenues
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22,000
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21,017
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152,478
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104,017
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Client expense
reimbursement
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-
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1,942
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1,191
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1,942
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Total
Revenues
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22,000
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22,959
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153,669
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105,959
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Cost of
revenues
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-
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60
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31,460
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9,163
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Cost of revenues
from a related party
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8,000
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7,500
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43,650
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24,500
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Gross
Profit
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14,000
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15,399
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78,559
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72,296
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Operating
expenses:
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Stock based
compensation
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-
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-
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1,640
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-
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Depreciation
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325
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-
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975
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-
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Sales and
marketing
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3,900
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-
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8,918
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3,204
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General and
administrative
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15,159
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16,258
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70,107
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48,228
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General and
administrative costs from a related party
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8,200
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7,500
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31,200
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22,500
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Total
operating expenses
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27,584
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23,758
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112,840
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73,932
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Net
(Loss) from operations
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(13,584)
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(8,359)
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(34,281)
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(1,636)
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Net
(Loss) before taxes
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(13,584)
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(8,359)
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(34,281)
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(1,636)
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Income
tax provision
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-
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-
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-
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-
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Net
(Loss) applicable to common shareholders
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(13,584)
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(8,359)
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(34,281)
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(1,636)
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Net
(Loss) per share - basic and diluted
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$(0.00)
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$(0.00)
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$(0.01)
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$(0.00)
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Weighted
number of shares outstanding -
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Basic
and diluted
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4,107,000
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4,025,000
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4,091,385
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4,025,000
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The
accompanying notes to financial statements are an integral part of
these statements.
F-2
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS
INC) CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
(UNAUDITED)
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Preferred
Stock
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Common
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Paid-In
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Retained
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Stockholders'
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Shares
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Par
Value
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Shares
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Par
Value
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Capital
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(Deficit)
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Equity
(Deficit)
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Balance December
31, 2015
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-
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-
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4,025,000
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$403
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$35,098
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$(21,239)
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$14,262
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Stock based
compensation
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-
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-
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82,000
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$8
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$1,632
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$1,640
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Net loss for
period
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-
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-
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$(34,281)
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$(34,281)
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Balance Sept 30,
2016
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-
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$-
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4,107,000
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$411
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$36,730
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$(55,520)
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$(18,379)
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The
accompanying notes to financial statements are an integral part of
these statements.
F-3
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS
INC) CONDENSED STATEMENTS OF
CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2016 AND 2015 (UNAUDITED)
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Nine Months
Ended Sept 30, 2016
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Nine Months
Ended Sept 30, 2015
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
(loss)
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$(34,281)
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$(1,636)
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Adjustments
to reconcile net (loss) to cash used in operating
activities:
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Stock based
compensation
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1,640
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-
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Depreciation
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975
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-
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Change
in operating assets and liabilities:
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Accounts
receivable
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(4,000)
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(1,200)
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Due from
shareholder
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13,000
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5,000
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Due to
shareholder
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9,250
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-
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Prepaid
expenses
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5,000
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-
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Accounts payable
and accrued expenses
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4,238
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(8,415)
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Net
cash (used in) operating activities
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(4,178)
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(6,251)
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NET
DECREASE IN CASH
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(4,178)
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(6,251)
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CASH
AND CASH EQUIVALENTS at beginning of period
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4,953
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13,372
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CASH
AND CASH EQUIVALENTS at end of period
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775
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7,121
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Supplemental
disclosure of cash flow information
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Cash
paid for:
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Interest
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$-
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$-
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Income
Taxes
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$-
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$-
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The
accompanying notes to financial statements are an integral part of
these statements.
F-4
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS
INC) NOTES TO FINANCIAL
STATEMENTS
Note 1. The Company History and Nature of the
Business
Results-Based
Outsourcing Inc. (formerly Digital Commerce Solutions Inc.) (the
“Company”), formed on July 22,
2013. The Company is a consulting company for the
small business enterprise market (here-in-under, referred to as the
“SME Market”). In general, SME Market
companies range from sole proprietors – the one-person band
running his or her business with no employees – through to
those that have up to 50 employees. The
Company targets those SME companies with limited resources and/or
infrastructure looking to outsource their operations and/or
corporate-level functions (“Business
Services”). Such Business Services might include,
financial reporting, accounting, sales and marketing, compliance,
legal, human resource management or investor
relations.
The
Company also looks to help clients identify, implement and maintain
third-party Software-as-a- Service (“SAAS”) products
that help streamline business operations through
automation.
The
financial statements have been prepared using accounting principles
generally accepted in the United States of America applicable for a
going concern, which assumes that the Company will realize its
assets and discharge its liabilities in the ordinary course of
business. Since inception, the Company has a
retained deficit of $55,520 at September 30,
2016. We have a limited operating history and our
growth is dependent upon maintaining our client base, achieving
sales growth, management of operating expenses and ability of the
Company to obtain the necessary financing to fund future
obligations and pay liabilities arising from normal business
operations when they come due, and upon profitable
operations.
We may
need to either borrow funds from our majority shareholder or raise
additional capital through equity or debt financings. We expect our
current majority shareholder will be willing and able to provide
such additional capital. However, we cannot be
certain that such capital (from our shareholders or third parties)
will be available to us or whether such capital will be available
on terms that are acceptable to us. Any such
financing likely would be dilutive to existing stockholders and
could result in significant financial operating covenants that
would negatively impact our business. If we are
unable to raise sufficient additional capital on acceptable terms,
we will have insufficient funds to operate our business or pursue
our planned growth.
Note 2. Summary of Significant Accounting
Policies
Basis of Presentation and Organization
The accompanying
financial statements of the Company were prepared from the accounts
of the Company under the accrual basis of accounting. The balance
sheet at December 31, 2015 was derived from audited financial
statements but does not include all disclosures required by
accounting principles generally accepted in the United Sates of
America. The other information in these condensed financial
statements is unaudited but, in the opinion of management, reflects
all adjustments necessary for the fair presentation of the results
for the periods covered. These financial statements should be read
in conjunction with the financial statements and additional
information as contained in our Form S-1A for the year ended
December 31, 2015.
Cash and Cash Equivalents
For
purposes of reporting within the statement of cash flows, the
Company considers all cash on hand, cash accounts not subject to
withdrawal restrictions or penalties, and all highly liquid debt
instruments purchased with a maturity of three months or less to be
cash and cash equivalents. The Company’s cash and cash
equivalents are located in a United States bank. As of September
30, 2016 there were no cash equivalents.
Fixed Assets
Office
equipment is stated at cost and depreciated over three years using
the straight line method of accounting. For the
nine months ended September 30, 2016 and 2015, the company recorded
depreciation of $975 and of $0, respectively.
F-5
Revenue Recognition
The
Company derives its revenue from the sale of business outsourcing
consulting, recruiting and staff placement services.
The Company utilizes written contracts as the means to establish
the terms and condition services are sold to
customers.
Consulting Services
Because
the Company provides its applications as services, it follows the
provisions of Securities and Exchange Commission Staff Accounting
Bulletin (“SAB”) No. 104, Revenue Recognition. The Company
recognizes revenue when all of the following conditions are
met:
●
there
is persuasive evidence of an arrangement;
●
the
service has been provided to the customer;
●
the
collection of the fees is reasonably assured; and
●
the
amount of fees to be paid by the customer is fixed or
determinable.
The
Company records revenue as services are
performed. Invoicing is done at the beginning of
each month for the services to be rendered that month.
Reimbursements
The
Company incurs certain out-of-pocket expenses that are reimbursed
by its clients, which are accounted for as revenue in its Statement
of Operations.
Income (Loss) per Common Share
Basic
income(loss) per share is computed by dividing the net loss
attributable to the common stockholders by the weighted average
number of shares of common stock outstanding during the period.
Fully diluted income (loss) per share is computed similar to basic
loss per share except that the denominator is increased to include
the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if
the additional common shares were dilutive. There were
no dilutive financial instruments issued or outstanding for the
period ended September 30, 2016.
Income Taxes
The
Company accounts for income taxes pursuant to FASB ASC 740.
Deferred tax assets and liabilities are determined based on
temporary differences between the bases of certain assets and
liabilities for income tax and financial reporting purposes. The
deferred tax assets and liabilities are classified according to the
financial statement classification of the assets and liabilities
generating the differences.
The
Company maintains a valuation allowance with respect to deferred
tax assets. The Company establishes a valuation allowance based
upon the potential likelihood of realizing the deferred tax asset
and taking into consideration the Company’s financial
position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of
sufficient taxable income within the carry-forward period under the
Federal tax laws. Changes in circumstances, such as the
Company generating taxable income, could cause a change in judgment
about the realizability of the related deferred tax asset. Any
change in the valuation allowance will be included in income in the
year of the change in estimate.
Fair Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable
judgment is required in estimating fair value. Accordingly, the
estimates of fair value may not be indicative of the amounts the
Company could realize in a current market exchange. As of September
30, 2016 the carrying value of accounts receivable, accounts
payable and accrued expenses approximated fair value due to the
short-term nature and maturity of these instruments.
F-6
Estimates
The
financial statements are prepared on the basis of accounting
principles generally accepted in the United States. The preparation
of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities as of September 30, 2016 and cumulative expenses from
inception. Actual results could differ from those estimates made by
management.
Customer Concentration
For the
nine months ended September 30, 2016, 3 customers made up 71% of
our gross revenue, including 51%, 10% and 10% and we had revenue
from a total of 11 customers. During the
nine months ended September 30, 2015, 3 customers made up 90% of
our revenue, including 42%, 24% and 24%. As of September 30, 2016,
2 customers made up 100% of our accounts receivable, including, 50%
and 50%.
Stock-Based Compensation
Stock
compensation arrangements with non-employee service providers are
accounted for in accordance ASC 505-50 Equity-Based Payments to Non-Employees,
using a fair value approach. For the nine months ended September
30, 2016, we recorded $1,640 in stock based compensation. The
Company believes the $0.02 per share value attributed to the stock
based compensation is fair as it reflects the same price paid by
new shareholders and no significant changes have occurred in the
company plan since the last investment. There is no other market
for the security.
Recent accounting pronouncements
In
March 2016, the Financial Accounting Standards Board issued
Accounting Standards Codification Update No. 2016-09 Compensation
– Stock Compensation (Topic 718). The amendments in this
update affect all entities that issue share-based payment awards to
their employees. The areas for simplification in this Update
involve several aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification
of awards as either equity or liabilities, and classification on
the statement of cash flows. For public business entities, the
amendments in this Update are effective for annual periods
beginning after December 15, 2016, and interim periods within those
annual periods.
In May 2014, the Financial
Accounting Standard Board Issued Accounting Standards Codification
Update Non 2014-09 Revenue from Contracts with Customers (Topic
616). The amendment for a
public entity, effective for annual reporting periods beginning
after December 15, 2016, including interim periods within that
reporting period. Early application is not permitted. A public
entity is an entity that is any one of the following: (1) a public
business entity, (2) a not-for-profit entity that has issued, or is
a conduit bond obligor for, securities that are traded, listed, or
quoted on an exchange or an over-the-counter market, (3) an
employee benefit plan that files or furnishes financial statements
to the SEC.
In August 2016, the Financial
Accounting Standard Board Issued Accounting Standards Codification
Update Non 2016-15 Statement of Cash Flows (Topic 230),
Classification of Certain Receipts and Cash Payments. The amendment
for a public company for annual reporting periods beginning
December 15, 2017, and interim periods within those fiscal
years.
The Company has implemented all new
accounting pronouncements that are in effect and that may impact
its financial statements and does not believe that there are any
other new accounting pronouncements that have been issued that
might have a material impact on its financial position or results
of operations.
F-7
3. Common Stock
On
February 16, 2016, the Board of Directors approved an agreement
with legal counsel for the Company which included; the issuance of
82,000 shares of common stock and the total payment of $15,000 to
counsel for services related to the Company’s Form S-1
Registration Statement.
4. Income Taxes
The
provision for income taxes for the nine months ended September 30,
2016 and 2015 was as follows (assuming a 15% effective tax
rate):
|
Nine months
ended September 30, 2016
|
Nine Months
ended September 30, 2015
|
|
|
|
Current
Tax Provision:
|
|
|
Federal-State-Local
|
$-
|
$-
|
|
|
|
Total current tax
provision
|
$-
|
$-
|
|
|
|
Deferred
Tax Provision:
|
|
|
Loss
carry-forwards
|
(5,142)
|
(245)
|
Change
in valuation allowance
|
5,142
|
245
|
|
|
|
Total deferred tax
provision
|
$-
|
$-
|
|
|
|
The Company had
deferred income tax asset as of as follows:
|
|
September 30
2016
|
December 31,
2015
|
Loss
carry-forwards
|
$(8,328)
|
$3,186
|
Less
- valuation allowance
|
8,328
|
(3,186)
|
|
|
|
Total net deferred
tax assets
|
$-
|
$-
|
The
Company provided a valuation allowance equal to the deferred income
tax assets for period ended September 30, 2016 because it is not
presently known whether future taxable income will be sufficient to
utilize the loss carry-forwards.
As of
September 30, 2016, the Company had approximately $55,520 in tax
loss carry-forwards that can be utilized in future periods to
reduce taxable income, and expire by the year 2036.
The
Company did not identify any material uncertain tax positions.
The Company did not recognize any interest or penalties for
unrecognized tax benefits.
The
federal income tax returns of the Company are subject to
examination by the IRS, generally for the three years after they
are filed. The Company's 2013, 2014 and 2015 federal and state tax
returns are still open for examination by the taxing
authorities.
F-8
5. Related Party Loans and Transactions
Ocean Cross Business Solutions Group LLC.
On
August 1, 2013, the Company engaged the services of Ocean Cross
Business Solutions Group LLC (“OCBSG Agreement”), to
provide client delivery services, finance and general management
services. Ocean Cross Business Solutions Group LLC
is owned by William Schloth, the husband of Mary Ellen
Schloth, our sole officer and director. She is also
the sole shareholder of MLH, our major
shareholder. The OCBSG Agreement provides for a
base monthly consulting fee of $5,000, plus additional payments
based upon services rendered during a
period. The Agreement may be terminated by
either party at any time. The Company terminated
the OCBSG Agreement as of September 30, 2015 and no money is owed
as of September 30, 2016.
William Schloth
On
October 1, 2015 the Company engaged the services of William Schloth
(“WS Agreement”) to provide client delivery services,
finance and general management services. Mr.
Schloth is the husband of Mary Ellen Schloth, the CEO and
majority shareholder of MLH, our majority
shareholder. The WS Agreement provides for a
monthly consulting fee of $5,000, plus additional payments based
upon services rendered during a period.
The
Company has reflected the above arrangements in the statements of
operation as related party expenses. For the nine months ended
September 30, 2016 the Company recorded $74,850. Of
that amount, $43,650 and $31,200, have been allocated to cost of
revenue and operating expenses, respectively. For the nine months
ended September 30, 2015 the Company recorded
$47,000. Of that amount, $24,500 and $22,500, have been
allocated to cost of revenue and operating expenses, respectively.
The Company did not owe any money under the WS Agreement as of
September 30, 2016.
Shareholder Loan
For the
period ended September 30, 2016 the Company owed Mountain Laurel
Holdings Inc. (“MLH”) $9,250. The amount owed does not
carry interest and there is no written agreement related to such
amount. The amount of $13,000 due from MLH as of December 31, 2015
was repaid.
6. Subsequent
Events
On
November 5, 2016, the Company’s major shareholder loaned the
company $5,000.
F-9
Item 2.
Management’s Discussion and Analysis or Plan of
Operation.
FORWARD-LOOKING STATEMENTS
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 this prospectus. 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 this
prospectus, and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or
circumstances.
We are
an emerging growth company as defined in Section 2(a)(19) of the
Securities Act. We will continue to be an emerging growth company
until: (i) the last day of our fiscal year during which we have
total annual gross revenues of $1,000,000,000 or more; (ii) the
last day of our fiscal year following the fifth anniversary of the
date of the first sale of our common stock pursuant to an effective
registration statement under the Securities Act; (iii) the date on
which we have, during the previous 3-year period, issued more than
$1,000,000,000 in non-convertible debt; or (iv) the date on which
we are deemed to be a large accelerated filer, as defined in
Section 12b-2 of the Exchange Act.
As an
emerging growth company, we are exempt from:
– Sections
14A(a) and (b) of the Exchange Act, which require companies to hold
stockholder advisory votes on executive compensation and golden
parachute compensation;
– The
requirement to provide, in any registration statement, periodic
report or other report to be filed with the Securities and Exchange
Commission (the “Commission” or “SEC”),
certain modified executive compensation disclosure under Item 402
of Regulation S-K or selected financial data under Item 301 of
Regulation S-K for any period before the earliest audited period
presented in our initial registration statement;
– Compliance
with new or revised accounting standards until those standards are
applicable to private companies;
– The
requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002
to provide auditor attestation of our internal controls and
procedures; and
– Any
Public Company Accounting Oversight Board (“PCAOB”)
rules regarding mandatory audit firm rotation or an expanded
auditor report, and any other PCAOB rules subsequently adopted
unless the Commission determines the new rules are necessary for
protecting the public.
We have
elected to use the extended transition period for complying with
new or revised accounting standards under Section 102(b)(1) of the
Jumpstart Our Business Startups Act.
We are
also a smaller reporting company as defined in Rule 12b-2 of the
Exchange Act. As a smaller reporting company, we are not required
to provide selected financial data pursuant to Item 301 of
Regulation S-K, nor are we required to comply with the auditor
attestation requirements of Section 404(b) of the Sarbanes-Oxley
Act of 2002. We are also permitted to provide certain modified
executive compensation disclosure under Item 402 of Regulation
S-K.
Summary of Business
We are
a consulting company for the small business enterprise market
(hereinafter referred to as the “SME
Market”). In general, SME Market companies
range from sole proprietors – the one-person operation with
no employees to those companies that have up to 50
employees. We target those SME companies with
limited resources and/or infrastructure looking to outsource all or
part of their operations and/or corporate level
functions. To get started, we recommend clients start
with outsourcing one or more of these areas; financial and
management reporting, accounting, tax reporting, legal and
compliance, human resource management or sales and marketing
(collectively our “Business Services”). We also
look to help clients identify, implement and maintain business
software products that are currently available in the marketplace
that help streamline business operations through automation (our
“Managed Software
Services”). Our Business Services and
Managed Software Services are collectively referred to as our
Services.
Our
Services are provided to clients on a project-based fee
arrangement or a fixed term agreement with an initial retainer and
monthly or periodic payments. Our fixed term agreements generally
arise when a client requires a service and does have the internal
manpower to fulfill the responsibility. We deliver our
Services through in-house personnel and outside independent
contractors which we directly engage to support our
clients. All billing and related contractual agreements
are made directly between our clients and our company.
2
Our
Strategy
Our
strategy for growing our operations includes:
●
Rolling out
various outbound sales and marketing campaigns to grow our client
base;
●
Expanding our
outsourced third party provider base to assist in cost efficiently
delivering our services; and
●
Growth
through acquisition with complementary service providers and
software product companies.
Plan of Operations
We plan
to establish a broad customer base by various traditional and
internet marketing campaigns.
As of
this date, we have taken the following steps to implement our
business plan:
–
Development
of our business plan
–
Developed the
basic components of our delivery system, including engagement
sizing and business-area maturity grading tools;
–
We
have developed and launched our website,
www.rboutsourcing.com
–
We
have identified 50 business software-as-a-service tools that should
help our clients streamline their operations and corporate
functions
Over
the next twelve months we plan to;
–
continue to
standardize the processes of how our consulting services are
provided. This is important to allow us to efficiently scale our
operations with increased revenue. We are already delivering
services, the process has already been designed and now will focus
on continuous improvements.
–
increase efforts
to acquire new clients. We plan to do internet marketing that might
include, search engine marketing, blogging, social media,
affiliated marketing, organic and paid for search engine
optimization. We may also employ certain traditional marketing
tactics, including, mail, phone calls, content development,
industry networking and direct selling. We plan to issue our first
Internet marketing campaign in the 1st calendar quarter
of 2017. We anticipate this to cost around $10,000;
–
Our
internal performance metric milestone targets include:
1.
Target
number of customers. By March 31, 2017, we are targeting to engage
a minimum of two new customers per month with a cumulative target
of 20 customers over the next twelve months. The targeted
customer retention rate for new customers is six months. We intend
to reinvest from 25%-50% of our profits back into sales and
marketing efforts. We expect our marketing efforts to drive the
speed at which our client base grows.
2.
Refine
through independent research and feed-back from clients, our
database of what we consider best-in-class business
software-as-a-service tools. By March 2017, we
intend to have a database of over 100 such products to advise our
clients on and help them implement and maintain.
3.
New
employees; Our business model for expansion of direct in-house
participants is under an independent contractor/cash or fixed fee
basis. If an independent contractor is utilized on a particular
engagement, in advance of commencing such work and agreed upon
price is established based upon the scope of work. Furthermore,
these independent contractors general work remotely. As such, this
keeps our fixed overhead very low and motivates our people to drive
more revenue
3
Results of Operations
Summary of Key Results
For the unaudited three month periods ending September 30, 2016 and
2015
Revenue
and Cost of Revenues
Total
revenue for the three months ended September 30, 2016, and 2015 was
$22,000, and $22.959, respectively.
Cost of
revenues for the three months ended September 30, 2016 and 2015
were $8,000 and $7,560, respectively. Such amounts included $8,000
and $7,500 paid to a related party, respectively.
Operating Expenses
Total
operating and administrative expenses for the three months ended
September 30, 2016 and 2015 were $27,584 and $23,758, respectively.
That amount included depreciation of $325 and $0, respectively. The
remaining amount primarily consists of professional services and
reporting expenses. The Company recorded general and administrative
costs of related party of $8,200 and $7,500, for the three months
ended September 30, 2016 and 2015, respectively.
For the unaudited nine month periods ending September 30, 2016 and
2015
Revenue
and Cost of Revenues
Total
revenue for the nine months ended September 30, 2016, and 2015 was
$153,669, and $105,959, respectively. The increase was due to the
addition of 7 new clients.
Cost of
revenues for the nine months ended September 30, 2016 and 2015 were
$75,110 and $33,663, respectively. Such costs include $31,460 and
$9,163 paid to independent contractors, and, $43,650 and $24,500
paid to a related party, respectively.
Operating Expenses
Total
operating and administrative expenses for the nine months ended
September 30, 2016 and 2015 were $112,840 and $73,932,
respectively. That amount included stock based compensation and
depreciation of $1,640 and $0, and $975 and $0, respectively. The
remaining amount primarily consists of professional services and
reporting expenses. The Company recorded general and administrative
costs of related party of $31,200 and $22,500, for the nine months
ended September 30, 2016 and 2015, respectively.
Liquidity and Capital Resources
At
September 30, 2016, we had cash of $775 and a working capital
deficit of $20,654. Since inception, we have
raised $35,098 in equity capital. We had a total
stockholders’ deficit of $18,379 and an accumulated deficit
of $55,520 as of September 30, 2016.
We used
$4,178 and $6,251 in operating activities for the nine months ended
September 30, 2016 and 2015,
respectively. These include net loss of
$34,281 and $1,636, respectively. Cash flows
provided by (used in) operating activities included changes in
operating assets and liabilities totaling $27,488 and ($4,615) for
the nine months ended September 30, 2016 and 2015,
respectively.
Our
future growth in dependent upon achieving sales growth, management
of operating expenses and ability of the Company to obtain the
necessary financing to fund future obligations, and upon profitable
operations.
4
As of
September 30, 2016, our cash balance was $775. We
believe we will require a minimum of $50,000 in additional cash
over the next 12 months to maintain our regulatory reporting and
filings and cover our operations costs. Should our revenues not
increase as expected and if our costs and expenses prove to be
greater than we currently anticipate, or should we change our
current business plan in a manner that will increase or accelerate
our anticipated costs and expenses, the depletion of our working
capital would be accelerated. In the event that our revenues from
operations are insufficient to meet our working capital needs, our
major shareholder, Mountain Laurel Holdings Inc. has indicated that
they may be willing to provide funds required to maintain the
reporting status in the form of a non-secured loan for the next
twelve months as the expenses are incurred if no other proceeds are
obtained by the Company. However, there is no
contract in place or written agreement securing this agreement.
Management believes if the Company cannot maintain its reporting
status with the SEC it will have to cease all efforts directed
towards the Company. As such, any investment previously made would
be lost in its entirety.
Consistent
with Section 144 of the Delaware General Corporation Law, it is our
current policy that all transactions between us and our officers,
directors and their affiliates will be entered into only if such
transactions are approved by a majority of the disinterested
directors, are approved by vote of the stockholders, or are fair to
us as a corporation as of the time it is authorized, approved or
ratified by the board. We will conduct an appropriate review of all
related party transactions on an ongoing basis.
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
The
Company derives its revenue from the sale of compliance, legal,
risk management and management and public reporting consulting
services. The Company utilizes written contracts as the means to
establish the terms and condition services are sold to
customers.
5
Consulting Services
Because
the Company provides its applications as services, it follows the
provisions of Securities and Exchange Commission Staff Accounting
Bulletin (“SAB”) No. 104, Revenue Recognition. The Company
recognizes revenue when all of the following conditions are
met:
●
there
is persuasive evidence of an arrangement;
●
the
service has been provided to the customer;
●
the
collection of the fees is reasonably assured; and
●
the
amount of fees to be paid by the customer is fixed or
determinable.
The
Company recognizes revenue as services are performed
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 reports 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
6
Part II- Other Information
Item 1. Legal Proceedings
We are
not a party to any legal proceedings. Management is not aware of
any legal proceedings proposed to be initiated against us. However,
from time to time, we may become subject to claims and litigation
generally associated with any business venture operating in the
ordinary course.
Item 1A. Risk Factors
Not
applicable to a “smaller reporting company” as defined
in Item 10(f)(1) of SEC Regulation S-K
Item 3. Recent Sale of Unregistered Securities
None.
Item 2. Exhibits
Exhibit
Number
|
|
Description
|
||
|
|
|
||
31.1*
|
|
Rule 13a-14(a) Certification of the Chief Executive and Financial
Officer
|
||
32.1*
|
|
Section 1350 Certification of Chief Executive and Financial
Officer
|
||
|
*
F
|
* Filed
along with this document
|
7
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
Results-Based
Outsourcing Inc
|
|
|
|
|
Dated: November 14, 2016
|
By:
|
/s/ Mary Ellen Schloth
|
|
|
Mary Ellen Schloth
|
|
|
Chief Executive Officer, Chief Accounting Officer &
Chairman
|
|
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons
on behalf of the registrant and in the capacities
indicated.
Signature
|
Title
|
Date
|
/s/ Mary Ellen Schloth
Mary Ellen Schloth
|
Chief Executive Officer, Chief Accounting Officer &
Chairman
|
November 14,
2016
|
8