U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2008
Commission File Number: 000-17064
Oasis Online Technologies Corp
(Exact name of small business issuer as specified in its charter)
Minnesota | | 41-1430130 |
(State or other jurisdiction of
incorporation or organization) | | (IRS Employer Identification No.) |
4710 E Falcon Drive Suite 213 Mesa, Arizona 85215(Address of principal executive offices including zip code)
(480) 634-5840(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o
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 of the Exchange Act.
| | Large accelerated filer ____ | | Accelerated filer____ |
| | Non-accelerated filer____ | | Smaller reporting company X . |
| | (Do not check if smaller reporting company) | |
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes x No o
As of September 30, 2008, the Registrant had 13,471,208 shares of common stock, $.01 par value per share, outstanding.
| | Index | |
| | | |
| Part I | | Page |
| | | |
| Item 1. | Financial Statements | |
| | | |
| | Balance Sheets as of September 30, 2008 (unaudited) and June 30, 2008 | 4 |
| | | |
| | Statements of Operations, Three Months ended September 30, 2008 and 2007
And the period from April 26, 2006 (date of commencement of development
Stage) through September 30, 2008 (unaudited). | 5 |
| | | |
| | Statements of Cash Flows, three Months ended September 30, 2008 and 2007,
And the period from April 26, 2006 (date of commencement of development
Stage) through September 30, 2008 (unaudited). | 6 |
| | | |
| | Notes to Financial Statements | 7 |
| | | |
| Item 2. | Management Discussion & Analysis of Financial Conditions and Results of Operations | 9 |
| | | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 9 |
| | | |
| Item 4T. | Controls and Procedures. | 10 |
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| Part II | Other Information | |
| | | |
| Item 1. | Legal Proceedings | 11 |
| | | |
| Item 1A. | Risk Factors | 11 |
| | | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 11 |
| | | |
| Item 3. | Defaults Upon Senior Securities | 11 |
| | | |
| Item 4. | Submission of Matters to a Vote of Security Holders | 11 |
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| Item 5. | Other Information | 11 |
| | | |
| Item 6. | Exhibits | 11 |
2
PART I FINANCIAL INFORMATION
The accompanying financial statements have been prepared by Oasis Online Technologies Corp, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2008 and 2007 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2008 audited financial statements. The results of operations for these interim periods are not necessarily indicative of the results for the entire year.
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| Item 1. | Financial Statements. |
OASIS ONLINE TECHNOLOGIES CORP
(A Development Stage Company)
BALANCE SHEETS
ASSETS |
| | | | | | | |
| | | September 30,
2008
(Unaudited) | | | June 30,
2008
(See Note 1) | |
| Current Assets | | | | | | |
| Cash | $ | 1,050 | | $ | 9,159 | |
Marketable securities net of fair value
Adjustment of $6,630 and $66,875 | | 870 | | | 26,875 | |
| Security deposits | | 775 | | | 775 | |
| Total Current Assets | | 2,695 | | | 36,809 | |
| | | | | | | |
| Fixed Assets | | | | | | |
| Furniture and equipment | | 5,385 | | | 5,385 | |
| Less accumulated depreciation | | (769 | ) | | (500 | ) |
| Total Fixed Assets | | 4,616 | | | 4,885 | |
| Total Assets | $ | 7,311 | | $ | 41,694 | |
| | | | | | | |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT)/Equity |
| | | | | | | |
| Current Liabilities: | | | | | | |
| Accounts Payable | $ | 51,394 | | $ | 33,945 | |
| Accounts payable-related party | | 3,450 | | | 1,257 | |
| Salaries payable | | 32,500 | | | - | |
| Total Current Liabilities | | 87,344 | | | 35,202 | |
| | | | | | | |
| Total Liabilities | | 87,344 | | | 35,202 | |
| | | | | | | |
| Stockholders' (Deficit)/Equity: | | | | | | |
Common Stock, $.01 par value,
100,000,000 shares authorized
13,471,208 and 13,471,208 shares
issued and outstanding respectively | | 134,712 | | | 134,712 | |
| Additional paid-in capital | | 4,223,485 | | | 4,223,485 | |
| Accumulated (deficit) | | (3,539,288 | ) | | (3,539,288 | ) |
| Accumulated (deficit) during development stage | | (898,942 | ) | | (812,417 | ) |
| Total Stockholders' (Deficit)/Equity | | (80,033 | ) | | 6,492 | |
| Total Liabilities and Stockholders' (Deficit) | $ | 7,311 | | $ | 41,694 | |
| | | | | | | |
| | | | | | | |
| The accompanying notes are an integral part of the financial statements. | | | | | | |
4
OASIS ONLINE TECHNOLOGIES CORP
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited) |
| | Three Months Ended | | For the
Period from
April 26,
2006 (date of
Commencement
of development
stage)
through | |
| September 30,
2008 | | September 30,
2007 | | September 30,
2008 | |
| Revenues | $ | - | | $ | - | | $ | - | |
| | | | | | | | | | |
| Expenses: | | | | | | | | | |
| Accounting fees | | 14,800 | | | 10,000 | | | 38,500 | |
| Legal fees | | 15,000 | | | 25,544 | | | 91,296 | |
| Press release & edgar fees | | 285 | | | 1,273 | | | 5,945 | |
| Transfer agent fees | | 4,254 | | | 4,721 | | | 17,644 | |
| Other professional fees | | 830 | | | - | | | 4,739 | |
| Compensation fees | | 44,755 | | | - | | | 196,029 | |
| Bad debt expense | | 1,538 | | | - | | | 62,530 | |
| Travel fees | | - | | | 4,311 | | | 15,393 | |
| Rent expense | | 2,534 | | | - | | | 9,238 | |
| Other fees | | 1,546 | | | 914 | | | 28,411 | |
| Total Expenses | | 85,542 | | | 46,763 | | | 469,725 | |
| Net (Loss) from Operations | | (85,542 | ) | | (46,763 | ) | | (469,725 | ) |
| | | | | | | | | | |
| Other Income (Loss): | | | | | | | | | |
| Realized (loss) - sale of Investment securities | | (2,520 | ) | | - | | | (431,848 | ) |
| Interest income | | 1,537 | | | - | | | 2,631 | |
| Total Other Income (Loss) | | (983 | ) | | - | | | (429,217 | ) |
| | | | | | | | | | |
| Net (Loss) | | (86,525 | ) | | (46,763 | ) | | (898,942 | ) |
| | | | | | | | | | |
| Per Share | $ | (.006 | ) | $ | (.004 | ) | $ | (.085 | ) |
| | | | | | | | | | |
| Weighted Average Number of Shares Outstanding | | 13,471,208 | | | 12,429,808 | | | 10,544,819 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| The accompanying notes are an integral part of the financial statements. | | | | | | | | | |
| | | | | | | | | | |
OASIS ONLINE TECHNOLOGIES CORP
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited) |
| | Three Months Ended | | For the
Period from
April 26,
2006 (date of
Commencement
of development
stage)
through | |
| September 30,
2008 | | September 30,
2007 | | September 30,
2008 | |
| Cash Flows from Operating Activities: | | | | | | | | | |
| Net (loss) | $ | (86,525 | ) | $ | (46,763 | ) | $ | (898,942 | ) |
| | | | | | | | | | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | |
| Increase in depreciation | | 269 | | | - | | | 769 | |
| Increase in accounts payable | | 16,192 | | | 6,936 | | | 51,394 | |
| Increase in due to affiliate | | 3,450 | | | - | | | 3,450 | |
| Increase in salaries payable | | 32,500 | | | - | | | 32,500 | |
| (Decrease) in checks written in excess of cash balance | | - | | | (5,293 | ) | | - | |
| Loss on investment securities | | 2,520 | | | - | | | 431,848 | |
| Net Cash Used In Operating Activities | | (31,59 | ) | | (45,120 | ) | | (378,981 | ) |
| | | | | | | | | | |
| Cash Flows from Investing Activities: | | | | | | | | | |
| Furniture and equipment | | - | | | - | | | (5,385 | ) |
| Security deposits | | - | | | - | | | (775 | ) |
| Cash received from investment Securities | | 23,485 | | | - | | | 309,782 | |
| Leasehold improvement | | - | | | (397 | ) | | - | |
| Net Cash Provided By (Used in) Investing Activities | | 23,485 | | | (397 | ) | | 303,622 | |
| | | | | | | | | | |
| Cash Flows from Financing Activities | | | | | | | | | |
| Issuance of common stock for cash | | - | | | 41,851 | | | 71,046 | |
| Additional paid-in capital | | - | | | 4,166 | | | 5,363 | |
| Net Cash Provided by Financing Activities | | - | | | 46,017 | | | 76,409 | |
| | | | | | | | | | |
| Increase (decrease) in Cash | | (8,109 | ) | | 500 | | | 1,050 | |
| Cash, Beginning of Period | | 9,159 | | | - | | | - | |
| Cash, End of Period | $ | 1,050 | | $ | 500 | | $ | 1,050 | |
| | | | | | | | | | |
| Interest Paid | $ | - | | $ | - | | $ | - | |
| | | | | | | | | | |
| Income Taxes Paid | $ | - | | $ | - | | $ | - | |
| | | | | | | | | | |
| | | | | | | | | | |
| The accompanying notes are an integral part of the financial statements. | | | | | | | | | |
6
OASIS ONLINE TECHNOLOGIES CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2008 (Unaudited)
(1) Unaudited Financial Statements
The balance sheet as of September 30, 2008, the statements of operations and the statements of cash flows for the three month periods ended September 30, 2008 and 2007 have been prepared by Oasis Online Technologies Corp (Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at September 30, 2008 and for all periods presented, have been made.
It is suggested that these statements be read in conjunction with the June 30, 2008 audited financial statements and the accompanying notes included in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission.
(2) Basis of Presentation
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company has limited working capital and limited business operations, which raises substantial doubt about its ability to continue as a going concern.
In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its operations. However, the Company has sustained losses from operations and has net capital and working capital deficits, which raises substantial doubt about its ability to continue as a going concern.
Management has identified markets that they view as favorable for development and has developed initial plans for penetrating these markets. Management has identified and acquired access and rights to key technologies they believe will form the core of the Company's product line. Management of the Company is currently in the process of creating four distinct subsidiaries in order to market its current and future products and services through. Management believes that their plan provides an opportunity for the Company to continue as a going concern.
(3) Development Stage Company
Based upon the Company's current business plan, it is a development stage enterprise since operations have just commenced. Accordingly, the Company presents its financial statements in conformity with the accounting principles generally accepted in the United States of America that apply in establishing operating enterprises. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from commencement of development stage to the current balance sheet date. The development stage began April 26, 2006 when it commenced activities to again establish the Company as a reporting company with the Securities and Exchange Commission.
(4) Related Party Transactions
During the quarter ended September 30, 2008 the Company's largest single shareholder, Big Eye Capital, Inc. ("Big Eye") made cash advances to the Company to pay expenses. At September 30, 2008 the Company owed $3,450 to Big Eye for advances made to the Company to pay expenses. These cash advances to the Company are uncollateralized, bear no interest and are due on demand.
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OASIS ONLINE TECHNOLOGIES CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2008 (Unaudited)
(5) Common Stock
Pursuant to the Articles of Incorporation, as amended on September 19, 2007, the Company is authorized to issue 100,000,000 common shares, with a par value of $.01 per share. As of September 30, 2008 there were 13,471,208 shares of common stock issued and outstanding.
(6) Investments -- Marketable Securities
The company received proceeds of $23,485 from the sale of 11,500 shares of marketable securities held by the Company, and recorded gross realized losses on those sales of $2,520 during the quarter ended September 30, 2008. The Company's management has evaluated the likelihood that the impairment in the stock price of this investment would be permanent and it was determined that this was likely to be a permanent impairment for the remaining time that the Company intended to hold these securities and thus the Company has recorded a loss for the fair value adjustment in the amount of $1,280 for the remaining shares owned by the Company.
(7) Subsequent events
On October 24, 2008 the Company entered into a 3-year Revenue Share Agreement (the "Revenue Agreement") with SVC Cards, Inc., pursuant to which SVC Cards, Inc. has agreed to enter into distribution agreements with Oasis so that the Company can market SVC's financial products to Oasis customers and contacts. Under the terms of the Revenue Share Agreement, Oasis will receive 60-65% of the net revenue generated from the sale of SVC's products and the Company can create its own co-branded products with SVC Cards.
On November 5, 2008, Oasis Online Technologies (the "Company") entered into a Master License Agreement with TranSend International, Inc., a Nevada corporation ("TranSend"), pursuant to which the Company acquired a 5-year exclusive Master License for Transend's PocketServer™ software. The license gives the Company the right to distribute, grant sub-licenses, co-brand, re-brand, grant additional master licenses, use, sell, offer for sale, import, or otherwise distribute PocketServer™ anywhere in the world. The license also grants the Company the right to further sublicense PocketServer™ to any third party for further distribution of the Products, as that term is defined in the Master License Agreement.
The Company as consideration for the purchase of this Master License money advanced by the Company to TranSend International, Inc. as part of a Line of Credit Agreement in the amount of $63,038 (which includes accrued interest through November 4, 2008) which was applied as the payment for the grant of the license. In addition the Company shall pay TranSend a royalty of 10% of the net sales of new PocketServer™ software licenses, the Company will also pay a royalty of 10% of the net collections from previous TranSend customers.
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| Item 2 | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS |
This report includes certain forward-looking statements. Forward-looking statements are statements that predict the occurrence of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. We have written the forward-looking statements specified in the following information on the basis of assumptions we consider to be reasonable. However, we cannot predict our future operating results. Any representation, guarantee, or warranty should not be inferred from those forward-looking statements.
The assumptions we used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty in economic, legislative, industry, and other circumstances. As a result, judgment must be exercised in the identification and interpretation of data and other information and in their use in developing and selecting assumptions from and among reasonable alternatives. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results. Accordingly we express no opinion on the achievability of those forward-looking statements. We cannot guarantee that any of the assumptions relating to the forward-looking statements specified in the following information are accurate. We assume no obligation to update any such forward-looking statements.
Oasis Online Technologies Corp. was incorporated under the laws of the state of Minnesota in 1980 as Implant Technologies, Inc. To better reflect the Company's current goals the Company's name was changed to Oasis Online Technology Corp on September 19, 2007.
Oasis Online Technologies Corp's planned business will be the marketing of key core technologies and products that are easily adaptable for multiple market segments which require secure storage and convenient mobile, portable, and/or online use of data. The Company's planned products and features will be designed and marketed to protect against or prevent real world problems such as transaction fraud, identity theft, online theft, expense account fraud, abducted children and HIPPA violations while making the online experience easier and faster.
Management intends to acquire core technology platforms through acquisitions, licensing agreements, joint ventures and/or by internally guided development. This core technology should encrypt critical information and be able to move this information on and off of smart-chip enabled mediums such as smart-cards, USB tokens, and cellular telephones. The information must be compressed to allow for the minimum storage capabilities of these devices. These core technologies, being platform based, will allow them to be readily adapted or combined with other feature-rich software applications or products to appeal to different market segments.
Under Management's current plans the Company will form four (4) wholly-owned subsidiaries whereby each subsidiary can leverage the Core Technology(s) that Oasis will acquire, to focus its sales efforts exclusively on only one of the four distinct market segments that have initially been identified. This will allow each subsidiary to build distinctly different marketing and sales strategies tailored exclusively to their segments. As the success of this strategy may be demonstrated, and resources become available, the Company may form additional subsidiaries to take advantage of other opportunities and markets. The initial market segments to be targeted are; 1) Financial Institutions, 2) Online Consumers, 3) Medical Provider Networks, and 4) Families with young children.
The Company generated no revenues during the quarter ended September 30, 2008. The Company has little capital. The Company anticipates operational costs will be limited until such time as significant progress is made by management to raise the capital that will be needed to implement its current plan. To that end the Company is currently working on raising these funds and the Company received November 6, 2008 subscriptions for over $250,000 for the first tranches of its funding plan.
The Company currently has significant accounts payable and anticipates trying to negotiate settlement of some of the current accounts payable and management feels confident in its ability to quickly move forward to revenue generating operations and further moving the Company's business to the next stages.
| Item 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not required by smaller reporting companies.
9
| ITEM 4T | CONTROLS AND PROCEDURES |
(a) Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance.
As of the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in timely alerting them to material information relative to our Company required to be disclosed in our periodic filings with the SEC.
(b) Changes in Internal Control over Financial Reporting.
During the quarter ended September 30, 2008, there were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
10
PART II. OTHER INFORMATION
None.
Not required by smaller reporting companies.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
| Item 3. | Defaults upon Senior Securities |
None.
| Item 4. | Submission of Matters to a Vote of Security Holders |
None during the three-month period covered by this report.
None.
| Exhibit 10.1 | Revenue Share Agreement Entered into on October 24, 2008 between SVC Cards, Inc. and Oasis Online Technologies Corp |
| | |
| Exhibit 10.2 | Master License Agreement Executed on November 5, 2008 between TranSend International, Inc. and Oasis Online Technologies Corp |
| | |
| Exhibit 31.1 | Certification by Chief Executive Officer, required by Rule 13a- 14(a) or Rule 15d-14(a) of the Exchange Act, promulgated under the Securities and Exchange Act of 1934, as amended. |
| | |
| Exhibit 31.2 | Certification by Chief Financial Officer, required by Rule 13a- 14(a) or Rule 15d-14(a) of the Exchange Act, promulgated under the Securities and Exchange Act of 1934, as amended. |
| | |
| Exhibit 32.1 | Certification by Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
| Exhibit 32.2 | Certification by Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
11
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | OASIS ONLINE TECHNOLOGIES CORP. |
| | | |
| Date: November 11, 2008 | |
By: /s/ Erik J. Cooper
Erik J. Cooper
Chief Executive Officer and President
(Principal Executive Officer) |
| | | |
| Date: November 11, 2008 | | By: /s/ John H. Venette
John H. Venette
Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal Accounting Officer) |
| | | |
| | | |
| | | |
12
