UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 30, 2015
or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to _____________.
Commission File Number: 333-198300
Oranjtek Co. |
(Exact name of registrant as specified in its charter) |
Delaware |
| 33-1230065 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
3422 Old Capitol Trail, Suite 700, Wilmington, DE |
| 19808 |
(Address of principal executive offices) |
| (Zip Code) |
(302) 295-6635
(Registrant’s telephone number, including area code)
_____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
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 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 x No ¨
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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ |
Non-Accelerated Filer | ¨ | Smaller Reporting Company | x |
(Do not check if a 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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As of June 10, 2015, there were 2,000,000 shares, $0.001 par value per share, of common stock outstanding.
ORANJTEK CO.
Quarterly Report on Form 10-Q for the
Period Ended April 30, 2015
TABLE OF CONTENTS
PART I— FINANCIAL INFORMATION | |||||
Item 1. | Financial Statements (Unaudited) | F-1 | |||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 8 | |||
Item 4. | Control and Procedures | 8 | |||
PART II— OTHER INFORMATION | |||||
Item 1. | Legal Proceedings | 9 | |||
Item 1A. | Risk Factors | 9 | |||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 9 | |||
Item 3. | Defaults Upon Senior Securities | 9 | |||
Item 4. | Mine Safety Disclosures | 9 | |||
Item 5. | Other Information | 9 | |||
Item 6. | Exhibits | 10 | |||
SIGNATURES | 11 | ||||
2 |
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.
We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.
These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
CERTAIN TERMS USED IN THIS REPORT
When this report uses the words “we,” “us,” “our,” “Oranjtek,” and the “Company,” they refer to Oranjtek Co. “SEC” refers to the Securities and Exchange Commission.
3 |
OranjTek Co.
April 30, 2015 and 2014
Index to the Financial Statements
Balance Sheet as of April 30, 2015 (unaudited) and October 31, 2014 | F-2 | |||
Statement of Operations for the nine months and three months ended April 30, 2015, for the period from September 17, 2013 (Inception) through April 30, 2014 and for the three months ended April 30, 2014 (unaudited) | F-3 | |||
Statement of Changes in Stockholder's Equity for the period from September 17, 2013 (Inception) through April 30, 2015 (unaudited) | F-4 | |||
Statement of Cash Flows for the nine months ended April 30, 2015 and for the period from September 17, 2013 (Inception) through April 30, 2014 (unaudited) | F-5 | |||
Notes to the Financial Statements (unaudited) | F-6 |
F-1 |
OranjTek Co.
Balance Sheets
| April 30, 2015 | July 31, 2014 | |||||||
| (Unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 13,065 | $ | 28,014 | ||||
Prepayments and other current assets | - | 5,000 | ||||||
Total current assets | 13,065 | 33,014 | ||||||
Total assets | $ | 13,065 | $ | 33,014 | ||||
Liabilities and Stockholder's Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | - | $ | - | ||||
Total current liabilities | - | - | ||||||
Stockholder's Equity | ||||||||
| ||||||||
Common stock par value $0.001: 100,000,000 shares authorized; 2,000,000 shares issued and outstanding | 2,000 | 2,000 | ||||||
Additional paid-in capital | 37,150 | 35,150 | ||||||
Accumulated deficit | (26,085 | ) | (4,136 | ) | ||||
Total stockholder's equity | 13,065 | 33,014 | ||||||
Total liabilities and stockholder's equity | $ | 13,065 | $ | 33,014 | ||||
See accompanying notes to the financial statements.
F-2 |
OranjTek Co.
Statements of Operations
| For the Period from | ||||||||||||||||
| For the nine months | For the three months | September 17, 2013 (inception) | For the three months | |||||||||||||
| ended | ended | through | ended | |||||||||||||
| April 30, 2015 | April 30, 2015 | April 30, 2014 | April 30, 2014 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Operating Expenses | ||||||||||||||||
Professional fees | 20,232 | 4,406 | - | - | ||||||||||||
General and administrative expenses | 1,717 | 151 | 2,079 | 30 | ||||||||||||
Total operating expenses | 21,949 | 4,557 | 2,079 | 30 | ||||||||||||
Loss before Income Tax Provision | (21,949 | ) | (4,557 | ) | (2,079 | ) | (30 | ) | ||||||||
Income Tax Provision | - | - | - | - | ||||||||||||
Net Loss | $ | (21,949 | ) | $ | (4,557 | ) | $ | (2,079 | ) | $ | (30 | ) | ||||
Earnings per share | ||||||||||||||||
- Basic and Diluted | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average common shares outstanding | ||||||||||||||||
- Basic and Diluted | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | ||||||||||||
See accompanying notes to the financial statements.
F-3 |
OranjTek Co.
Statement of Changes in Stockholder's Equity
For the period from September 17, 2013 (inception) through April 30, 2015
(Unaudited)
| Common stock par value $0.001 | Additional | Total | ||||||||||||||||||
| Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Stockholder's Equity | ||||||||||||||||
September 17, 2013 ( inception ) | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
| ||||||||||||||||||||
Issuance of common shares as compensation upon formation valued at $0.001 per share upon formation | 2,000,000 | 2,000 | 2,000 | |||||||||||||||||
Capital contribution | 35,150 | 35,150 | ||||||||||||||||||
Net loss | (4,136 | ) | (4,136 | ) | ||||||||||||||||
Balance, July 31, 2014 | 2,000,000 | 2,000 | 35,150 | (4,136 | ) | 33,014 | ||||||||||||||
Capital contribution | 2,000 | 2,000 | ||||||||||||||||||
Net loss | (21,949 | ) | (21,949 | ) | ||||||||||||||||
Balance, April 30, 2015 | 2,000,000 | $ | 2,000 | $ | 37,150 | $ | (26,085 | ) | $ | 13,065 | ||||||||||
See accompanying notes to the financial statements.
F-4 |
OranjTek Co.
Statements of Cash Flows
| For the Period from September 17, | ||||||||
| For the nine months | 2013 (inception) | |||||||
| ended | through | |||||||
| April 30, 2015 | April 30, 2014 | |||||||
| (Unaudited) | (Unaudited) | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (21,949 | ) | $ | (2,079 | ) | ||
Common shares issued for compensation and services | - | 2,000 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepayments and other current assets | 5,000 | - | ||||||
Net Cash Used in Operating Activities | (16,949 | ) | (79 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Capital contribution | 2,000 | 25,150 | ||||||
Net Cash Provided by Financing Activities | 2,000 | 25,150 | ||||||
Net Change in Cash | (14,949 | ) | 25,071 | |||||
Cash - beginning of reporting period | 28,014 | - | ||||||
Cash - end of reporting period | $ | 13,065 | $ | 25,071 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | - | $ | - | ||||
Income tax paid | $ | - | $ | - | ||||
See accompanying notes to the financial statements.
F-5 |
OranjTek Co.
April 30, 2015 and 2014
Notes to the Financial Statements
(Unaudited)
Note 1 - Organization and Operations
OranjTek Co.
OranjTek Co. (the “Company”) was incorporated on September 17, 2013 under the laws of the State of Delaware. The Company intends to engage in the business of marketing and distribution of umbrellas.
Note 2 - Summary of Significant Accounting Policies
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation – Unaudited Interim Financial Information
The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements of the Company for the reporting period ended July 31, 2014 and notes thereto contained in the Company’s Registration Statement on Form S-1, which was declared effective on January 30, 2015.
Fiscal Year-End
The Company elected July 31 as its fiscal year ending date.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).
F-6 |
Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were as follows:
(i) | Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. | |
| ||
(ii) | Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors. |
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
F-7 |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and prepayment and other current assets approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include (a) affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
F-8 |
Commitment and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Revenue Recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable and (iv) collectability is reasonably assured.
Deferred Tax Assets and Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. 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 be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
F-9 |
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax years that remain subject to examination by major tax jurisdictions
The Company discloses tax years that remain subject to examination by major tax jurisdictions pursuant to the ASC Paragraph 740-10-50-15.
Earnings per Share
Earnings Per Share is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. Earnings per share ("EPS") is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.
There were no potentially dilutive common shares outstanding for the period ended April 30, 2015 or 2014.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
F-10 |
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently Issued Accounting Pronouncements
In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).
In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.
When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):
a. | Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans) |
| |
b. | Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations |
| |
c. | Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern. |
F-11 |
If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:
a. | Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern |
| |
b. | Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations |
| |
c. | Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. |
The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.
In January 2015, the FASB issued the FASB Accounting Standards Update No. 2015-01 “Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”).
This Update eliminates from GAAP the concept of extraordinary items and the requirements in Subtopic 225-20 for reporting entities to separately classify, present, and disclose extraordinary events and transactions.
The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.
Note 3 – Going Concern
The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).
The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had an accumulated deficit at April 30, 2015, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
F-12 |
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Stockholder's Equity
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred Million (100,000,000) shares of Common Stock, par value $0.001 per share.
Common Stock
Upon formation the Company issued 2,000,000 shares of common stock to its stockholder, officer and director valued at $0.001 per share, or $2,000 in aggregate as compensation.
Additional Paid-in Capital
For the period ended July 31, 2014, the stockholder, officer and director of the Company contributed $35,150 in cash as additional paid-in capital.
For the period ended April 30, 2015, the stockholder, officer and director of the Company contributed $2,000 in cash as additional paid-in capital.
Note 5 – Related Party Transactions
Related Parties
Related parties with whom the Company had transactions are:
Related Parties |
| Relationship |
Karen Travis | President and Director |
Free Office Space
The Company has been provided office space by its President at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statement.
Note 6 – Subsequent Events
The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.
F-13 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the results of operations and financial condition for the three months and six months ended April 30, 2015 and 2014 and should be read in conjunction with our financial statements, and the notes to those financial statements that are included elsewhere in this report.
Overview
We are a development stage corporation with limited operations and no revenues from our business operations. In order to obtain funds needed to implement our business plan, we are attempting to raise money from an ongoing direct offering. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
We are currently completing 3 prototype umbrella designs with ibrolly umbrella in the UK. The artwork is complete and we expect to have the first prototype samples completed within 60 days. We will begin the construction of our website in the next 30 days and expect to have it completed within 6 months.
If we raise the minimum amount through our offering, we will be able to achieve the short-term goals of our business plan and to continue operations and remain in business for the next 12 months. If we are unable to generate revenues for any reason, or if we are unable to make a reasonable profit, we may have to cease operations. At the present time, we have not made any arrangements to raise additional cash, other than through this offering. If we need additional cash and cannot raise it, we will either have to suspend implementation of our business plan until we do raise the cash, or cease operations entirely if revenue from operations will not be sufficient to cover our operating costs.
If we raise the maximum amount, we believe we can implement our short term and long-term business plan and achieve profitable operations. However, we cannot guarantee that proceeds from this offering will be sufficient for us to continue as going concern for the next five years. If we raise less than the maximum amount and we require additional funds, it may be necessary for us to obtain additional funds. We, however, have no other financing plans, other than described above.
We estimate that expenses of being a public reporting company with the SEC will be approximately $20,000 per year. This amount includes audit and review fees of our financial statements of $10,000, filing fees (annual and quarterly reports) of $5,000 and legal and other professional fees of $5,000.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us upon which to base an evaluation of our performance. We are in the development stage of operations and cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in advertising and marketing costs, administration expenditures associated with daily operations, accounting and audit fees, and legal fees related to filings and regulatory compliance.
We anticipate relying on equity sales of our common stock in order to continue to implement our business plan. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for to fund our planned business activities. We may also rely on loans from our Directors; however, there are no assurances that our Directors will provide us with any additional funds.
Currently, we do not have any arrangements for additional financing. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing shareholders.
4 |
Results of Operations
A summary of our operations for the three months ended April 30, 2015 and 2014 follows:
| 2015 | 2014 | |||||||
Revenue | $ | - | $ | - | ||||
Professional Fees | 4,406 | - | ||||||
General and Administrative | 151 | 30 | ||||||
Total Operating Expenses | 4,557 | 30 | ||||||
Net Loss | $ | (4,557 | ) | $ | (30 | ) | ||
Total Operating Expenses
Total operating expenses for the three months ended April 30, 2015 and April 30, 2014 were $4,557 and $ 30 respectively, representing an increase of $4,527. This increase in total operating expenses is mostly attributable to an increase in professional fees.
Net Loss
Net loss for the three months ended April 30, 2015 and April 30, 2014 were ($4,557) and ($30) respectively. The increase in net loss is mostly attributable to the increase in operating expenses.
Liquidity and Capital Resources
We did not generate any revenue for the period ended April 30, 2015. We intend to use the proceeds from our ongoing offering to finance our ongoing operations and implementation of our short-term (12 months) business plan; however, there is no assurance can be given that we will be successful in our equity offering.
Currently, we have no clients, have no revenue and have not achieved profitability or positive cash flow. If we are not successful in obtaining clients, becoming profitability and creating positive cash flow, additional capital may be required to maintain ongoing operations. We have explored and are continuing to explore options to provide additional financing to fund future operations as well as other possible courses of action. Such actions include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans from our directors or other third parties, and other similar actions. There can be no assurance that we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, our directors, or other third parties, or any of the actions discussed above. If we cannot achieve profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.
The following summarizes the key components of the Company’s cash flows for the Nine months ended April 30, 2015:
Cash flows used in operating activities | $ | (16,949 | ) | |
Cash flows used in investing activities | $ | - | ||
Cash flows from financing activities | $ | 2,000 | ||
Net decrease in cash and cash equivalents | $ | (14,949 | ) |
5 |
Cash Flows from Operating Activities
Our cash flows from operating activities of $(16,949) for the Nine months ended April 30, 2015 are the result of operating costs and no revenues. The major uses of our operating cash include funding general operating expenses (legal and professional expenses, consulting, and general and administrative expenses).
Cash Flows from Investing Activities
We did not use or generate any cash from investing activities for the three months ended April 30, 2015.
Cash Flows from Financing Activities
For the Nine months ended April 30, 2015, the Company received $2,000 from a significant stockholder, officer and director as additional paid-in capital.
Plan of Operation
As of April 30, 2015, our cash balance was $13,065. We may not be able to raise sufficient funds from this offering to sustain our operations. Ms. Karen Travis, our sole officer and director, has informally agreed to advance funds on an as needed basis. Ms. Travis, however, has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. We do not currently have any arrangements for additional financing.
After the effectiveness of our registration statement by the SEC, we intend to concentrate our efforts on raising capital. During this period, our operations will be limited due to the limited amount of funds on hand. Our plan of operations following the completion is as follows:
Over the next twelve months, we intend to complete the following corporate milestones:
Design and Manufacture
| - | The prototype artwork of our first line of umbrella designs has been completed by ibrolly UK. |
| - | Work with ibrolly to develop prototype samples which we expect to have completed by July 31, 2015. This is expected to cost $5,000. |
| - | Once the prototype is finalized, agreed upon and approved, we will place the order with the manufacturer. This will take 3 months to complete and will cost approximately $15,000. |
6 |
Marketing
| - | While we are designing and manufacturing our umbrellas, we will be designing and finalizing our website. We expect that the initial launch of our website will coincide with the announcement of our product line. We anticipate that this will occur in the next six (6) months and will cost approximately $5,000. |
| - | In addition to finalizing the website, we will also be implementing a marketing plan and initiative to bring awareness of our product line to key fashion vendors and begin developing relationships with these people. We hope that as a result of our marketing efforts, that within 24 months, we will be able to develop enough relationships to begin to generate revenue. However, we have no way to accurately predict if our marketing efforts will be successful and whether they will lead to the generation of revenue. We expect our marketing initiative will cost approximately $15,000. |
In the event that we do not raise the expected capital of $100,000 from this Offering, we would apply the funds as stated in our “Use of Proceeds” section, but would also need to raise additional funding to complete our business goals. We do not know the amounts or source of the funds and will be required to attempt additional financing.
Critical Accounting Policies and Estimates
While our significant accounting policies are more fully described in Note 1 to our financial statements for the six months ended April 30, 2015 we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. 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 continually evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.
(i) | Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. | |
| ||
(ii) | Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors. |
Off-Balance Sheet Arrangements
Oranjtek has no off-balance sheet arrangements as of April 30, 2015 and July 31, 2014.
7 |
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information required by this item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our Disclosure Controls were not effective as of the end of the period covered by this report.
We are currently engaged in the review, documentation and remediation of its disclosure controls and procedures. Once our company is engaged in a business of merit and has sufficient personnel available, we will establish and implement the internal control procedures.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended April 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
8 |
PART II— OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
9 |
Item 6. Exhibits
Exhibit Number | Exhibit Title | |
31.1 | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification of Principal Executive Officer and Principal Financial OFficer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Schema | |
101.CAL | XBRL Taxonomy Calculation Linkbase | |
101.DEF | XBRL Taxonomy Definition Linkbase | |
101.LAB | XBRL Taxonomy Label Linkbase | |
101.PRE | XBRL Taxonomy Presentation Linkbase |
______________
* In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
10 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ORANJTEK CO. | |||
Date: June 15, 2015 | By: | /s/ Karen Travis | |
| Name: | Karen Travis | ||
| Title: | Chief Executive Officer, President and Director | ||
(Principal Executive Officer and Principal Financial Officer) | |||
11