U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
September 30, 2004
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____ to ____
Commission file number: 001-07894
OHANA ENTERPRISES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 95-2312900
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(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification No.)
23872 Pacific Coast Hwy, #167, Malibu, CA 90265
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(Address of Principal Executive Offices) (Zip Code)
(310) 456-3199
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Registrant's telephone number, including area code
Check whether the issuer: (1) filed all the reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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The number of outstanding shares of the issuer's common stock,
$0.001 par value (the only class of voting stock), as of November 11, 2004
was 388,823,300.
Transitional Small Business Disclosure Format (Check one): Yes No X
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OHANA ENTERPRISES, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS (UNAUDITED) -- as of June 30 and
September 30, 2004
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended September 30, 2003 and 2004
and from Inception (July 1, 2001)through
September 30, 2004
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended September 30, 2003 and 2004, and
From Inception (July 1, 2001) through September 30, 2004
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 3. CONTROLS AND PROCEDURES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
SIGNATURES
EXHIBITS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ohana Enterprises, Inc.
(A Development Stage Company)
<table>
<caption>
Condensed Balance Sheets
ASSETS
June 30, September 30,
2004 2004
---------------------------------------------
Unaudited
<s> <c> <c>
CURRENT ASSETS
Cash $ - $ 8
Prepaid expenses 302,582 577,318
Deferred cost of acquisition - 126,601
Other assets 384 384
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 191,650 $ 177,280
Accrued liabilities - related parties 148,367 99,053
Bank overdraft 14 -
Notes payable with accrued interest 41,926 10,100
Note payable with accrued interest - IICG 161,192 164,419
Total Current Liabilities 543,149 450,852
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value, 10,000,000
shares authorized;
Issued and outstanding: nil - -
Common stock, $.001 par value, 400,000,000
shares authorized;
75,392,275 and 388,823,300, respectively
issued and outstanding 75,393 388,823
Additional paid-in capital 4,149,423 4,970,124
Stock subscription receivable - ( 480,000)
Treasury stock, 810,000 shares - ( 810)
Accumulated deficit (4,464,999) ( 4,624,678)
Total Stockholders' Equity (Deficit) ( 240,183) 253,459
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 302,966 $ 704,311
</table>
168: The accompanying notes are an integral part of these financial statements.
F-1
Ohana Enterprises, Inc.
(A Development Stage Company)
<table>
<caption>
Condensed Statements of Operations
From Inception
(July 1, 2001)
Three Months Ended to
September 30, September 30,
2003 2004 2004
Unaudited Unaudited Unaudited
<s> <c> <c> <c>
General and administrative expenses $ 202,188 $ 246,086 $ 4,135,251
Loss from continuing operations (202,188) (246,086) (4,135,251)
Other income and expenses
Gain from extinguishment of debt - - 83,000
Gain from settlement of lawsuit - 90,415 90,415
Interest expense - ( 4,007) ( 7,901)
Net loss from continuing operations after other
income (202,188) (159,678) (3,969,737)
Discontinued operations
Loss on operations of Visual Interviews, Inc.,
less applicable income taxes ( 62,117) - ( 381,916)
Loss on disposal of Visual Interviews, Inc.,
Less applicable income taxes - - ( 73,025)
( 264,305) (159,678) (4,424,678)
- - ( 200,000)
Net loss $ (264,305) $ (159,678) $ (4,624,678)
Basic weighted average number of
common shares outstanding 16,951,740 155,219,107
0.02) $ ( 0.0010)
</table>
The accompanying notes are an integral part of these financial statements.
F-2
Ohana Enterprises, Inc.
(A Development Stage Company)
<table>
<caption>
Condensed Statements of Cash Flows
From Inception
(July 1, 2001)
Three Months Ended to
September 30, September 30,
2003 2004 2004
Unaudited Unaudited Unaudited
<s> <c> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $( 264,305) $ ( 159,678) $ (4,624,678)
Adjustments to reconcile net loss to
net provided by operating activities
Non-cash adjustments:
Effect of merger - - ( 27,717)
Provision for loss on receivable received
in merger - - 200,000
Issuance of stock for services 122,500 691,155 4,662,687
Gain from extinguishment of debt - - ( 83,000)
Gain from settlement of lawsuit - 90,415 ( 90,000)
Issuance of stock for note payable and
accrued interest - 32,168 32,168
Changes in:
Prepaid expenses 5,801 ( 274,736) ( 497,318)
Deferred acquisition cost - ( 126,601) ( 126,601)
Other assets ( 1,603) - ( 384)
Accounts payable and accrued liabilities 89,886 ( 14,372) 181,173
Accrued liabilities - related parties (17,382) ( 48,899) 99,053
Accrued interest - 525 525
( 65,103) 9,147 ( 274,092)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft - - 14
Payment received on subscription receivable 40,000 20,000 99,102
Offering costs - - ( 3,102)
Notes payable - ( 29,125) 170,100
Proceeds from sale of common stock - - 125,000
Payment on Note Payable Hudson Consulting - - ( 117,000)
40,000 ( 9,125) 274,114
NET CHANGE IN CASH ( 25,103) 22 22
CASH, beginning of period 25,190 ( 14) ( 14)
CASH, end of period $ 87 $ 8 $ 8
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Issuance of common stock for services $ 3,328,527 $ 318,655
$ 372,500
</table>
289: The accompanying notes are an integral part of these financial statements.
F-3
Ohana Enterprises, Inc.
A Development Stage Company)
Notes to Financial Statements
1. ORGANIZATION AND BUSINESS
Ohana Enterprises, Inc., a Delaware corporation, is in the development stage,
as defined in Financial Accounting Standards Board Statement No. 7. The
Company's year end is June 30.
The Company is seeking to identify an operational business opportunity
for acquisition to provide long term growth for its shareholders. We are
currently evaluating the purchase of 100% of the assets of an established 31
year-old California business valued at approximately $10 million. The
business is a leader in a niche market. The Company has begun to conduct
due diligence on this prospective acquisition to determine the
viability and value of its property and assets. Management believes that it
will take approximately four to five months to complete the due
diligence process of this specific acquisition candidate, which would
include inventory testing, building inspections and a complete three-year
trailing audit of the candidate's financial statements.
Building inspections have been completed and are being analyzed to determine
if more in-depth inspections should be conducted. Additionally, management
has met with current owners and contractors to discuss renovations which
would increase the efficiency and income potential of the property.
There can be no assurance that the results of the due diligence and
audit will be satisfactory or that the acquisition will be consummated, or that
if consummated, the business will be successfully integrated into the
Company's operations.
2. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been
derived from the accounts of Ohana Enterprises, Inc. The financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and in accordance
with the instructions for Form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by accounting principles
generally accepted in the United States.
In the opinion of management, the unaudited interim financial
statements for the three month period ended September 30, 2004, are
presented on a basis consistent with the audited financial statements
and reflect all adjustments, consisting only of normal recurring accruals,
necessary for fair presentation of the results of such period. The results
for the three months ended September 30, 2004 are not necessarily
indicative of the results of operations for the full year ending June 30, 2005.
These unaudited financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended June 30, 2004.
F-4
Ohana Enterprises, Inc.
(A Development Stage Company)
Notes to Financial Statements
2. BASIS OF PRESENTATION Continued
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements. Actual results may differ
from those estimates.
3. DEFERRED COST OF ACQUISITION
As of September 30, 2004, the Company has accumulated $126,601
in acquisition costs. The entire amount is related to costs paid to
consultants for services provided and to be provided in relation to the
acquisition. The Company issued, and the Consultants agreed to accept
in lieu of cash, an aggregate of 20,866,000 shares of common stock, par
$.001, as payment for these services.
4. RELATED PARTY PAYABLES
As of September 30, 2004, the Company owes a total of $99,053 to
management and consultants as reimbursement for expenses
incurred during the development phase of operations. Included in this
amount is $10,000 owed to Isaac Simmons and Kathyrn A. Christmann,
parents of Catherine Thompson, as reimbursement for legal fees paid in
the litigation against Hudson.
Per the consulting contract dated August 23, 2004, Ms. Catherine Thompson
has agreed to accept Ohana common stock as consideration for her services as
CFO during the period of April 1, 2003 - March 31, 2004, and as
consideration of balances owed to Ms. Thompson for reimbursement of out
of pocket expenses incurred on behalf of Ohana through June 30, 2004.
For the services rendered,the Company agreed to pay a total of $110,000
to Ms. Thompson with the issuance of 1,052,857 shares of the Company's
common stock to be registered on Form S-8 and 518,571 shares of restricted
common stock; all shares valued at $.07 per share. Ms. Thompson agreed to
defer the issuance of the 518,571 restricted shares. The issuance of those
shares will alleviate $36,300 of the balance of Accrued liabilities - related
parties as of September 30, 2004, for the balance owed to Ms. Thompson for
compensation during the above mentioned period.
Additionally, Ohana agreed to reimburse Ms. Thompson for out of pocket
expenses incurred on behalf of Ohana since inception in the
amount of $27,952.03. Ms. Thompson agreed to accept 11,180,812 shares
of restricted common stock, par $.001, as payment. Ms. Thompson agreed
to defer the issuance of these shares as well until such time as there are
sufficient shares available for the issuance.
See Note 8. "Subsequent Events".
F-5
Ohana Enterprises, Inc.
(A Development Stage Company)
Notes to Financial Statements
5. NOTES PAYABLE WITH ACCRUED INTEREST
The Company obtained financing in the form of a line-of-credit for
up to $30,000, which matured on June 30, 2004. Interest accrued at 20%
per annum and was payable on or before June 30, 2004. Per the agreement,
the Company, at its discretion, elected to settle the Note
with the issuance of restricted common stock at a discount of 30%
to the average bid price for the last 10 days prior to conversion.
The outstanding balance on the line-of-credit, including interest payable,
at July 27, 2004, the date of conversion, was $31,661. The Note was
converted into 4,523,040 shares of restricted common stock on July 27, 2004.
The Company entered into a second agreement with the same
party above described for a second line-of-credit for up to $15,000,
which matured on September 30, 2004. Interest accrued at
12% per annum and was payable on or before maturity. Similar to
the previously described note payable, the Company, at its discretion,
can either pay the line-of-credit with cash or with the issuance of
restricted common stock at a discount of 30% to the average bid
price for the last 10 days prior to conversion. The Company anticipates
settlement of the obligation with conversion into common stock and the
lender has agreed to defer payment until such time as there are
sufficient shares available for issuance. The outstanding balance
on the second line-of-credit, including interest payable, at
September 30, 2004, is $10,100. On July 27, 2004, the Company
issued 72,465 shares of restricted common stock valued at $.007,
which were applied to the accrued interest on the note.
6. SUBSCRIPTION RECEIVABLES
On September 14, 2004, the Company executed a Stock Purchase
Agreement (the "SPA") with GarcyCo Capital Corp. ("GCCC"). The SPA calls
for the issuance by the Company of an aggregate of 200,000,000 shares of
common stock to GCCC in consideration of the payment of $500,000 in cash.
TheCompany is to receive the funds in $50,000 increments each quarter,
beginning October 15, 2004. The 200,000,000 shares will be held in escrow
by the Company and delivered on a pro-rata basis within 10 days of receipt
of each installment. All shares are restricted within the meaning of Rule 144
under the Securities Act and must be held indefinitely unless subsequently
registered or qualified for exemption. The SPA includes a provision that the
purchase price per share, and therefore the number of shares to be
delivered at the time of each installment payment, will be calculated for each
installment at the lesser of: (a) $0.0025 or (b) a 37.5% discount to the 10 day
trailing closing price of the Company's common stock at the time of each
payment. As of September 30, 2004, the Company had received $20,000 of
F-6
Ohana Enterprises, Inc.
(A Development Stage Company)
Notes to Financial Statements
6. SUBSCRIPTION RECEIVABLES Continued
the first installment due on October 15, 2004. The number of shares for
delivery for this portion of the installment is 8,000,000 based on a price of
$.0025 per share as calculated per the agreement. Delivery will occur within
10 days of receipt of payment of the full amount of the installment due.
See Note 8. "Subsequent Events".
7. TREASURY STOCK
On September 22, 2004 the Company and Gerard Nolan, former
CEO and President of Ohana and its wholly-owned subsidiary, Visual
Interviews, executed a settlement agreement and general release in
which Mr. Nolan assigned all rights and ownership to an aggregate of
810,000 shares of Ohana common stock previously issued to him and
registered pursuant to a registration statement on Form S-8 under the
Securities Act of 1933, as amended. The Company had filed a Complaint
in the Superior Court of the State of California for the County of Los Angeles
against Mr. Nolan on March 19, 2004. The return of the shares was
accounted for using the par value method which charges the Treasury
Stock account with the par value of the shares, $810. The value of the
shares when issued was $90,000, and, therefore, the remaining
balance of $89,190 was debited to Additional paid-in capital.
8. SUBSEQUENT EVENTS
* As of the date of this filing the Company has received a total
of $53,788 from GarcyCo Capital Corp. The Company has delivered
42,609,216 shares of common stock from escrow valued at an
average price of $.00126 per share. The balance of 157,390,784
shares remain in escrow. It is recognized that the Company will be
required to issue additional shares to satisfy the terms of the agreement.
Currently, the deficit in the number of shares held in escrow is 21,094,016.
* On October 5, 2004, we received written consents in lieu of a meeting
of stockholders from the holders of a majority of our outstanding common stock,
approving the following actions:
1. To change the corporate name to Vinoble, Inc.; and
2. To institute a 500 for 1 reverse split of our issued and outstanding
shares of common stock (the "Reverse Split"), including any and all outstanding
options, warrants and rights as of October 15, 2004
(the "Record Date"), with all fractional shares rounded to the
nearest whole.
The Company filed its Definitive 14C on October 28, 2004,
and these actions became final as of November 19, 2004.
F-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, INCLUDING, WITHOUT LIMITATION,
STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS,
INTENTIONS OR FUTURE STRATEGIES THAT ARE SIGNIFIED BY THE
WORDS "EXPECTS", "ANTICIPATES", "INTENDS", "BELIEVES", OR SIMILAR
LANGUAGE. THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS, UNCERTAINTIES AND OTHER FACTORS. ALL
FORWARD-LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT
ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY ON
THE DATE HEREOF AND SPEAK ONLY AS OF THE DATE HEREOF.
THE FACTORS DISCUSSED BELOW UNDER "FORWARD-LOOKING
STATEMENTS" AND ELSEWHERE IN THIS QUARTERLY REPORT
ON FORM 10-QSB AND IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2004 ARE
AMONG THOSE FACTORS THAT IN SOME CASES HAVE AFFECTED
THE COMPANY'S RESULTS AND COULD CAUSE THE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED
IN THE FORWARD-LOOKING STATEMENTS.
The following discussion should be read in conjunction with
the condensed consolidated financial statements and notes thereto.
PLAN OF OPERATION
BACKGROUND
The Company emerged from bankruptcy on August 21, 1999
as Erly Industries, Inc. On January 24, 2001, Erly Industries, Inc. changed
its domicile from California to Delaware and changed its name to
Torchmail Communications, Inc. On October 18, 2002, the Company
consummated the acquisition of one hundred percent (100%) of the
outstanding common stock of Visual Interviews, Inc., a Nevada
corporation ("VI") in exchange for the issuance of an aggregate
of 9,384,543 shares of the Company's common stock to the
former VI shareholders.
This acquisition resulted from the Company's efforts over
a period of time to locate an existing business or business assets
with which the Company could enter into a merger or acquisition.
On December 10, 2002, the Company changed its name to Ohana
Enterprises, Inc. in association with the change in control and
acquisition of VI. Ohana Enterprises, Inc. is a holding company with
no operations. VI was a wholly-owned subsidiary of the Company,
and was the only operational business within the Company. However,
the VI business plan required significant operating expenses in order
to develop and expand its business model, its technology and its
operations, as well as to respond to unanticipated competitive
pressures. VI did not have a source of operating capital as it was
still in the development stage. In October 2003, the Company
suspended the development and operations of VI and began
to pursue potential opportunities for acquisition or merger that
would contribute an operating business to Ohana.
After an extensive review and consideration of available
opportunities, on April 1, 2004 the Company acquired 100% of the
issued and outstanding common stock of RestauranTech
("RestauranTech") from its parent company, Interactive Ideas
Consulting Group ("IICG"), in consideration for the issuance to
IICG of an aggregate of 1,700,000 shares of the Company's
Series A Convertible Preferred Stock (the "Series A Preferred Stock").
An additional 500,000 of Series A
Preferred Stock was to be issued for services in
connection with the acquisition. The Series A Preferred Stock
was intended to be convertible into common stock at a ratio of
100 shares of common stock for every one share of Series A
Preferred Stock. Neal Weisman, a shareholder of the Company,
was the former president and a former shareholder of IICG.
At April 1, 2004, the Company had an aggregate of 63,416,763 shares
of common stock outstanding on a fully-diluted basis. Therefore, if IICG
had converted all of the Series A Preferred Stock issuable on that date,
it would have owned and controlled 77.62% of the Company's
fully-diluted common stock and 77.62% of the Company's
outstanding common stock calculated pursuant to
Rule 13d-3(d)(1)(B) of the Securities Exchange Act of 1934.
Subsequent to the closing of the acquisition of
RestauranTech, certain differences in strategic direction for the
organization and other issues arose which caused the Company and IICG
to mutually rescind the transaction on May 27, 2004. The
Series A Preferred Stock had not been issued, and the Board of
Directors rescinded the resolution authorizing its issuance. The
Rescission Agreement required the Company to clear certain
outstanding balances and reimburse certain expenses of IICG
incurred in connection with the acquisition. This obligation is
evidenced by a Convertible Promissory Note in the principal
amount of $160,000 (the "Note"). The Note bears interest at the
rate of 8% per annum and is due and payable in full on or before
May 26, 2005. The Note requires that certain installment payments
be made to IICG contingent upon the receipt of certain funding levels
by the Company. If the Company receives $100,000 - $250,000 in
funding during the term of the Note, the Company is required to pay 20%
of those funds toward the amounts owing on the Note. If the Company
receives $250,001 - $500,000 during the term of the Note, the Company
is required to pay 25% of those funds toward the amounts owing on the
Note. If the Company receives funding of an amount greater than
$500,000, it is required to pay the full amount of principal and
interest owing on the Note. The Note is convertible into the Company's
common stock after January 2, 2005, at a conversion price equal to
the closing bid price for the Company's common stock on the date
prior to the date of notice of conversion. Conversion is automatic at maturity
if IICG does not request conversion earlier and if there is
no event of default. The shares would be issued as restricted common
stock but would have piggy-back registration rights.
Since June 2004, the Company has renewed its search
for an operating business or assets for acquisition. This search gained
momentum in September 2004, due in part to the consummation of a
significant investment in the Company by a strategic partner.
On September 14, 2004, the Company executed a Stock Purchase
Agreement (the "SPA") with GarcyCo Capital Corp. ("GCCC"). The SPA
calls for the issuance by the Company of an aggregate of 200,000,000
shares of common stock to GCCC in consideration of the payment of $500,000
in cash. The Company is to receive the funds in $50,000 increments each
quarter, beginning October 15, 2004. The 200,000,000 shares will be held in
escrow by the Company and delivered on a pro-rata basis within 10 days of
receipt of each installment. All shares are restricted within the meaning of
Rule 144 under the Securities Act and must be held indefinitely unless
subsequently registered or qualified for exemption. The SPA includes a
provision that the purchase price per share,
and therefore the number of shares to be delivered at the time of each
installment payment, will be calculated for each installment at the lesser
of: (a) $0.0025 or (b) a 37.5% discount to the 10 day trailing
closing price of the Company's common stock at the time of each payment.
As part of the consideration for the SPA, GCCC has the right to elect one
Board Member and agreed to retain Catherine Thompson and Michael Avatar
on the Board of Directors and as consultants through the next fiscal year,
ending June 30, 2005. GCCC has not yet designated its representative on
the Board of Directors. At September 14, 2004, the Company had an
aggregate of 152,553,778 shares of common stock outstanding on
a fully-diluted basis. Based on the price of the Company's common stock
at that date, GCCC would own and control approximately 56.73% of the
Company's fully-diluted common stock and 56.73% of the Company's
outstanding common stock calculated pursuant to Rule 13d-3(d)(1)(B)
of the Securities Exchange Act of 1934.
As of the date of this filing the Company has received a total of $53,788
from GCCC. The Company has delivered 42,609,216 shares of common stock
from escrow valued at an average price of $.00126 per share. The balance of
157,390,784 shares remain in escrow. It is recognized that the Company will
be required to issue additional shares to satisfy the terms of the SPA.
Currently, the deficit in the number of shares held in escrow is 21,094,016.
However, the Company effected a 500-for-one reverse stock split on
October 17, 2004, thereby enabling the issuance of the additional shares.
Management believes that the principals of GCCC will assist
in finding acquisition candidates for the Company, structuring such
acquisitions and effecting a transition to corporate growth. As part of this
strategy, the Company has entered into a non-binding Memorandum
of Understanding for the purchase of 100% of the assets of an
established 31 year-old California business valued at approximately
$10 million. The business is a leader in a niche market. The Company
has begun to conduct due diligence on this prospective acquisition to
determine the viability and value of its property and assets. Management
believes that it will take approximately four to five months to complete the
due diligence process of this specific acquisition candidate, which would
include inventory testing, building inspections and a complete three-year
trailing audit of the candidate's financial statements. Building
inspections have been completed and are being analyzed to
determine if more in-depth inspections should be conducted.
Additionally, management has met with current owners and
contractors to discuss renovations which would increase the efficiency
and income potential of the property.
Pending the outcome of the due diligence and the audit,
the Company believes that the acquisition of these assets would
provide the basis required for listing on a national exchange.
To assist in achieving that goal, the Company is conducting a
500 for 1 reverse split as approved by a majority of the holders
of common stock by written consent. In accordance with the
acquisition the Company's name will be changed to Vinoble, Inc.
to better reflect its new strategic direction. Both the name change
and the reverse split are expected to become effective on
November 17, 2004. Upon completion of the acquisition the
Company will be relocated to the San Francisco Bay Area.
There can be no assurance that the results of the due
diligence and audit will be satisfactory or that the acquisition will
be consummated, or that if consummated, the business will be
successfully integrated into the Company's operations. In the event
that the acquisition does not materialize, the Company will
continue to seek other opportunities. The Company does not plan to
limit its options to any particular industry, but will evaluate each
opportunity on its merits.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2004 Compared
To Three Months Ended September 30, 2003
Revenues. The Company did not generate any revenue in the three
months ended September 30, 2004 and 2003, respectively. Since the cessation
of all activities of VI in October 2003 due to the lack of operating
capital, the Company's focus has been on the evaluation and selection of an
existing business to effect a merger or acquisition. At June 30, 2004,
the Company discontinued VI's operations and recognized a loss, less
applicable taxes, of $73,025. The Company has entered into a non-binding
Memorandum of Understanding to acquire revenue earning assets of an
established 31 year old California business, including but not limited to
inventory for resale. It is anticipated that due diligence and the audit will
be completed in 4 to 5 months.
General and Administrative Expenses. The Company incurred
$246,086 in general and administrative expenses for the three months
ended September 30, 2004, compared to $202,188 for the three months
ended September 30, 2003. General and Administrative expenses relating
to the discontinued operations of VI for the period ended September 30, 2003
were $62,117. Included in general and administrative expense for the three
months ended September 30, 2004 was $80,000 of expense related to the
issuance of an aggregate of 14,277,831 shares of common stock to
consultants in lieu of cash compensation. In addition, $62,125 of expense
was related to the prior issuance of 990,000 shares for prepaid expenses.
At September 30, 2004, the Company had virtually no cash. Consultants
receiving stock agreed to receive these securities, in lieu of cash,
for payment of services rendered. In the three months ended
September 30, 2003, the Company realized an expense of
$122,500 related to the issuance of 1,116,667 shares of common stock
to consultants in lieu of cash compensation.
Sales and Marketing Expenses. The Company has incurred
no sales and marketing expenses since the date of inception as it has
been a development stage company.
Gain from Settlement of Lawsuit. In the three months ended
September 30, 2004, the Company settled litigation with Gerard Nolan,
its former Chief Executive Officer, in which Mr. Nolan assigned to the Company
all rights and ownership in 810,000 shares of the Company's common stock.
The settlement and assignment resulted in a gain of $90,415. No such
gain was recognized in the three months ended September 30, 2003.
Interest Expense. The Company recognized interest expense
of $4,007 in the three months ended September 30, 2004, representing interest
on borrowings during the period. No interest expense was incurred in the
comparable period in 2003.
Loss on Operations of VI, less applicable income taxes.
The Company realized a loss from VI's operations equal to $62,117 for the
three months ended September 30, 2003. As the development and
operations of VI were discontinued in the year ended June 30, 2004, no
similar loss was incurred for the three months ended September 30, 2004.
Net Loss. As a result of the foregoing factors, the Company's net
loss decreased from $264,305 for the three months ended September 30, 2003,
compared to a net loss of $159,678 for the three months ended
September 30, 2004. The net loss per share was $0.02 for the three month
period ended September 30, 2003, an decrease from $0.0010 for the three
month period ended September 30, 2004. The decrease in net loss per share
for the period was primarily due to the large increase in the number of shares
issued and outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company has an immediate need for capital.
At September 30, 2004, the Company had only $8.00 in cash or cash
equivalents; at June 30, 2004, the Company had no cash or cash
equivalents. The Company realized $9,147 in net cash from operating
activities during the three months ended September 30, 2004, compared
with $35,810 in net cash used by operating activities during the three
months ended September 30, 2003. The cash provided by operating
activities during the three months ended September 30, 2004 was
largely due to a non-cash gain of $691,155 reflecting the issuance of
stock for services, and $32,168 from the issuance of stock for a note
payable (including accrued interest). This gain was offset by non-cash
adjustments of $90,415 from the return of stock to treasury as a result
of a settlement with the Company's former chief executive officer and
from the write-off of the balance owed for a related party payable in the
amount of $415. Other changes affecting net cash used by operating
activities at September 30, 2004 included prepaid expenses of
$274,736, deferred acquisition costs of $126, 601, accrued liabilities to
related parties of $48,899, and accounts payable and accrued liabilities
of $14,372, offset by accrued interest of $525. The cash utilized in
operating activities during the three months ended September 30, 2003
primarily reflected non-cash adjustments of $122,500 for the
issuance of common stock for services. Cash changes included
accounts payable and accrued liabilities of $89,886 and prepaid
expenses of $5,801, offset by related party payables of $17,382
and other assets of $1,603.
The Company did not utilize cash for investing activities
during either of the three months ended September 30, 2004 or 2003.
Financing activities used $9,125 of cash during the three months ended
September 30, 2004, consisting primarily of $29,125 in payments on notes
payable, offset by proceeds of $20,000 from a subscription receivable. During
the three months ended September 30, 2003, financing activities provided
$40,000 of cash to the Company, consisting of $40,000 received on a
subscription receivable.
The Company has not had any revenues to date, and
has experienced operating losses since inception primarily caused
by its continued development and administrative costs. As shown in
the accompanying financial statements, the Company incurred a net
loss of $159,678 for the three months ended September 30, 2004.
Since inception, the Company has incurred a net loss of $4,624,678.
Primarily as a result of these recurring losses, Ohana's independent
certified public accountants modified their report on the June 30, 2004
financial statements to include an uncertainty paragraph wherein they
expressed substantial doubt about the Company's ability to continue as
a going concern. Management of the Company is actively seeking
additional capital; however, there can be no assurance that such financing
will be available on terms favorable to the Company, or at all. The financial
statements do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern. Continuation of the
Company as a going concern is dependent on the Company continuing
to raise capital, developing significant revenues and ultimately attaining
On May 27, 2004, the Company and IICG mutually rescinded
the acquisition of RestauranTech. The Rescission Agreement required the
Company to clear certain outstanding balances and reimburse certain
expenses of IICG incurred in connection with the acquisition. This obligation
is evidenced by a Convertible Promissory Note in the principal amount of
$160,000 (the "Note"). The Note bears interest at the rate of 8% per annum
and is due and payable in full on or before May 26, 2005. The Note requires
that certain installment payments be made to IICG contingent upon the receipt
of certain funding levels by the Company. If the Company receives
$100,000 - $250,000 in funding during the term of the Note, the Company
is required to pay 20% of those funds toward the amounts owing on the Note.
If the Company receives $250,001 - $500,000 during the term of the Note,
the Company is required to pay 25% of those funds toward the amounts
owing on the Note. If the Company receives funding of an amount greater
than $500,000, it is required to pay the full amount of principal and
interest owing on the Note. The Note is convertible into the Company's
common stock after January 2, 2005, at a conversion price equal to the
closing bid price for the Company's common stock on the date prior to the
date of notice of conversion. Conversion is automatic at maturity if IICG does
not request conversion earlier and if there is no event of default. The shares
would be issued as restricted common stock but would have piggy-back
registration rights.
On September 14, 2004, the Company executed the SPA with GCCC.
The SPA calls for the issuance by the Company of an aggregate of 200,000,000
shares of common stock to GCCC in consideration of the payment of $500,000 in
cash. The Company is to receive the funds in $50,000 increments each quarter,
beginning October 15, 2004. The 200,000,000 shares will be held in
escrow by the Company and delivered on a pro-rata basis within
10 days of receipt of each installment. All shares are restricted within the
meaning of Rule 144 under the Securities Act and must be held indefinitely
unless subsequently registered or qualified for exemption. The SPA includes
a provision that the purchase price per share, and therefore the number of
shares to be delivered at the time of each installment payment, will be
calculated for each installment at the lesser of: (a) $0.0025 or
(b) a 37.5% discount to the 10 day trailing closing price of the Company's
common stock at the time of each payment. As part of the consideration
for the SPA, GCCC has the right to elect one Board Member and
agreed to retain Catherine Thompson and Michael Avatar on the Board of
Directors and as consultants through the next fiscal year, ending
June 30, 2005. GCCC has not yet designated its representative on the
Board of Directors. At September 14, 2004, the Company had an aggregate
of 152,553,778 shares of common stock outstanding on a fully-diluted basis.
Based on the price of the Company's common stock at that date, GCCC
would own and control approximately 56.73% of the Company's fully-diluted
common stock and 56.73% of the Company's outstanding common
stock calculated pursuant to Rule 13d-3(d)(1)(B) of the Securities
Exchange Act of 1934.
As of the date of this filing the Company has received a total of $53,788 f
rom GCCC. The Company has delivered 42,609,216 shares of common
stock from escrow valued at an average price of $.00126 per share.
The balance of 157,390,784 shares remain in escrow. It is recognized
that the Company will be required to issue additional shares to satisfy
the terms of the agreement. Currently, the deficit in the number of shares
held in escrow is 21,094,016. However, the Company effected a
500-for-one reverse stock split on October 17, 2004, thereby enabling
the issuance of the additional shares.
Management believes that the principals of GCCC will assist
in finding acquisition candidates for the Company, structuring such acquisitions
and effecting a transition to corporate growth. As part of this strategy,
the Company has entered into a non-binding Memorandum of Understanding f
or the purchase of 100% of the assets of an established 31 year-old California
business valued at approximately $10 million. The business is a leader in a
niche market. The Company has begun to conduct due diligence on this
prospective acquisition to determine the viability and value of its property
and assets. Management believes that it will take approximately four to five
months to complete the due diligence process of this specific acquisition
candidate, which would include inventory testing, building inspections and
a complete three-year trailing audit of the candidate's financial statements.
Building inspections have been completed and are being analyzed to
determine if more in-depth inspections should be conducted.
Additionally, management has met with current owners and contractors
to discuss renovations which would increase the efficiency and income
potential of the property.
There can be no assurance that the results of the due diligence
and audit will be satisfactory or that the acquisition will be
consummated, or that if consummated, the business will be successfully
integrated into the Company's operations. In the event that the acquisition
does not materialize, the Company will continue to seek other opportunities.
The Company does not plan to limit its options to any particular industry, but
will evaluate each opportunity on its merits.
RISKS AND UNCERTAINTIES
The Company's business, financial condition or results of
operations could be materially and adversely affected by any
of the following risks:
RISKS RELATING TO OHANA'S BUSINESS
OHANA NEEDS SIGNIFICANT ADDITIONAL CAPITAL. The Company currently
has no income producing operations or assets and may have limited access to
additional capital. At September 30, 2004, the Company had only $8 in cash or
cash equivalents. Current cash and cash equivalents are currently
insufficient to meet anticipated cash needs for working capital and capital
expenditures. The Company therefore needs to raise additional funds
immediately. If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of existing
stockholders will be reduced, and such securities may have rights, preferences
and privileges senior to those of the Company's common stock. As described
above, on September 14, 2004, the Company executed the SPA with GCCC.
The SPA calls for the issuance by the Company of an aggregate of
200,000,000 shares of common stock to GCCC in consideration of the
payment of $500,000 in cash.
The Company is to receive the funds in $50,000 increments each quarter,
beginning October 15, 2004. The Company is currently
attempting to identify other prospective investors with respect to financing;
however, the Company has not entered into agreements with any such
investors. There can be no assurance that additional financing will be
available on terms favorable to the Company or at all.
If adequate funds are not available or are not available on acceptable terms,
the Company will not be able to fund its operations. Such inability to fund
operations will have a material adverse effect on the Company's
business, results of operations and financial condition.
OHANA HAS ONLY A LIMITED OPERATING HISTORY. The Company has
only a limited operating history upon which can be based an evaluation
of its prospects. Such prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies seeking to
enter into a merger or acquisition with another business entity.
There can be no assurance that the Company will be able to identify a qualified
candidate or that the resulting business combination will be successful.
Further, there can be no assurance that the acquisition / merger candidate
will have a more extensive operating history than the Company.
To address these risks and uncertainties, the Company must, among
other things, analyze the quality of the other firm's management and
personnel, the asset base of such firm or enterprise, the anticipated
950: acceptability of new products or marketing concepts,
the merit of the firm's business plan, and numerous other factors which are
difficult, if not impossible, to analyze through the application
of any objective criteria. There can be no assurance that Ohana will
successfully address these challenges.
THE COMPANY HAS A HISTORY OF LOSSES, AND ITS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS' REPORT DATED OCTOBER 11, 2004,
INCLUDES AN EXPLANATORY PARAGRAPH RELATING TO SUBSTANTIAL DOUBT
AS TO OHANA'S ABILITY TO CONTINUE AS A GOING CONCERN.
Since the Company's inception in 2001, it has incurred substantial losses from
operations, resulting primarily from costs related to development of
its technology and building its infrastructure. Because Ohana has discontinued
development and operations of its Visual Interviews subsidiary
due to lack of capital and in order to pursue acquisition of an operational
business entity, management expects to incur net losses for the
foreseeable future for administrative costs. If the Company is unable to
identify and execute a merger or acquisition transaction within a
reasonable amount of time or if the business combination is
unsuccessful, Ohana's losses will be significantly greater. The Company
may never achieve profitability. Primarily as a result of these recurring
losses, Ohana's independent certified public accountants modified their
report on the June 30, 2004 financial statements to include an
uncertainty paragraph wherein they expressed substantial doubt about
the Company's ability to continue as a going concern.
At this time, the Company does not have a source of operating capital
and has limited assets. As a result, Ohana will attempt to raise
additional capital through public or private debt or the sale of equity
and/or debt securities. However, there can be no assurance that additional
financing will be available on terms favorable to Ohana, or that additional
financing will be available at all. If adequate funds are not available or
are not available on acceptable terms, the Company may not be able to
attract a favorable candidate for merger or acquisition or be able to continue
to maintain cost of compliance with SEC reporting requirements. Such
inability could have a material adverse effect on the Company's business,
financial condition, results of operations and prospects.
OHANA IS SEEKING AN OPERATING BUSINESS OR ASSETS TO
ACQUIRE; THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL
FIND A VIABLE BUSINESS OR SUCCESSFULLY CONSUMMATE AN ACQUISITION.
Ohana is seeking an operating business or assets to acquire.
Although it has identified certain acquisition candidates, the Company has no
binding commitments to enter into or acquire a specific business opportunity.
There can be no assurance that the Company will successfully locate a viable
business or consummate an acquisition. Any business or assets that the
Company acquires will have certain risks; however, as no specific business
has been identified the Company cannot determine or disclose specific risks
of a particular business or industry into which it may enter.
The type of business acquired may be one that desires to avoid undertaking
its own public offering and the accompanying expense, delay, uncertainty
and federal and state regulatory requirements protecting investors.
Because of the Company's limited capital, it is more likely than not that
any acquisition by the Company will involve other parties whose primary
interest is the acquisition of control of a publicly traded company.
Any business opportunity acquired may be currently unprofitable or
present other risks. An acquisition will most likely be highly illiquid and
could result in a total loss to the Company and its stockholders.
THE COMPANY MAY BE UNABLE TO CONDUCT EXTENSIVE
DUE DILIGENCE ON AN ACQUISITION CANDIDATE. Ohana has limited funds
and only one full-time manager, thus making it impracticable to
conduct a complete investigation and analysis of business opportunities
before the Company commits its capital or other resources thereto. Therefore,
management decisions will likely be made without detailed feasibility studies,
independent analysis or other extensive due diligence which they would
conduct with more funding and other resources. The Company will depend
to a great extent upon information provided by the promoter, owner, sponsor
or others associated with the business opportunity seeking the Company's
participation. The Company generally will require audited financial statements
from companies that it proposes to acquire.
Where such audited financial statements are unavailable,
the Company will have to rely upon unaudited financial information
received from target companies which has not been verified by
outside auditors. The lack of independent verification which audited
financial statements would provide increases the risk that the Company,
in evaluating an acquisition with the target company, will not have the
benefit of full and accurate information about the financial condition and
recent interim operating history of the target company. This risk increases
the prospect that the acquisition of such a company might prove to be an
unfavorable one for the Company or the holders of the Company's
securities.
The Company will be subject to the reporting provisions of the
Exchange Act, and thus will be required to furnish certain information about
significant acquisitions, including audited financial statements for
any business that it acquires. Consequently, acquisition candidates that
do not have, or are unable to provide reasonable assurances that they will
be able to obtain, the required audited financial statements would not be
considered by the Company to be appropriate for acquisition so long as
the reporting requirements of the Exchange Act apply. Should the Company
complete an acquisition of an entity for which audited financial statements
prove to be unobtainable, the Company would be subject to an SEC
enforcement action and/or administrative sanctions.
In addition, the lack of audited financial statements would prevent the
Company's common stock from being eligible for listing on NASDAQ or any other
stock exchange, and would restrict the Company from conducting public offerings
of securities under the Securities Act, until such financial statements became
available.
AN ACQUISITION MIGHT BE HIGHLY LEVERAGED AND EXPOSE OHANA TO
ADDITIONAL LOSSES. There is a possibility that any acquisition of a business
by the Company might be financed by the Company's borrowing against the assets
of the business to be acquired or against the business' future revenues
or profits. This leverage could increase the Company's exposure
to larger losses. A business acquired through a leveraged transaction
is profitable only if it generates enough revenues to cover the related
debt and expenses. Ohana's failure to make payments on the debt incurred to
purchase the business could result in the loss of all of the assets acquired.
There can be no assurance that any business acquired through a
leveraged transaction will generate sufficient revenues to cover the related
debt and expenses.
OHANA MAY EXPERIENCE INTEGRATION ISSUES. The Company's strategy to
grow by acquisition could fail due to the inability to integrate the
acquired company or companies with Ohana. The integration of two or
more companies is an expensive and timely process and, as such, failure
would be a burden to the Company's cash requirements and would
significantly increase the Company's net operating loss.
Should Ohana invest its time and resources into an acquisition
that is unable to integrate with the Company, management's time may be
diverted from operational activities and other opportunities.
THE COMPANY HAS LIMITED MANAGEMENT RESOURCES AND MAY EXPERIENCE
MANAGEMENT CHANGES. The Company currently has only one full-time
manager, and thus has limited management resources for both the
operation of the Company and the pursuit of acquisition candidates. There is
no assurance that current management will continue to serve the
Company in the future. After the consummation of an acquisition, it is likely
that the current officer and directors of the Company would
resign. Any decision to resign will be based upon the identity of the
business acquired and the nature of the transaction.
THE COMPANY'S OPERATING RESULTS MAY VARY FROM QUARTER TO QUARTER.
Due to the suspension of all development of VI's technology and the
change in the Company's primary business, the Company's quarterly operating
results will be difficult to predict and may fluctuate significantly from
quarter to quarter. Consequently, the market price of Ohana's
securities has been, and can be expected to continue to be, highly volatile.
Factors such as announcements by the Company or others of
technological innovations, new commercial products, regulatory approvals
or proprietary rights developments and competitive developments all may
have a significant impact on the Company's future business prospects
and market price of its securities.
RISKS RELATED TO OHANA'S STOCK
SHARES ELIGIBLE FOR FUTURE SALE BY OUR CURRENT
STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE. To date,
we have had a limited trading volume in our common stock. As long as this
condition continues, the sale of a significant number of shares of common
stock at any particular time could be difficult to achieve at the market prices
prevailing immediately before such shares are offered. In addition, sales of
substantial amounts of common stock, including shares issued upon the
exercise of outstanding options and warrants, under Securities and Exchange
Commission Rule 144 or otherwise could adversely affect the prevailing market
price of our common stock and could impair our ability to raise
capital at that time through the sale of our securities. In the past, due to a
shortage of cash we have compensated our employees and consultants
in shares of our common stock. This practice may continue in the future.
Many of these shares have been registered or will be registered for resale
to the public in registration statements on Form S-8.
THE COMPANY'S COMMON STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE;
THE COMMON STOCK IS "PENNY STOCK". The market price of the
Company's common stock is likely to be highly volatile as the
stock market in general, and the market for technology companies in particular,
has been highly volatile. The trading prices of many technology companies'
stocks have recently been highly volatile and have recorded lows well
below historical highs.
Factors that could cause such volatility in the Company's common
stock may include, among other things:
- actual or anticipated fluctuations in quarterly operating results;
- announcements of technological innovations;
- changes in financial estimates by securities analysts;
- conditions or trends in the Company's industry; and
- changes in the market valuations of other comparable companies.
In addition, the Company's stock is currently traded on the
NASD O-T-C Bulletin Board and it is uncertain that it will be able
to successfully apply for listing on the AMEX, the NASDAQ National Market,
or the Nasdaq Small Cap Market in the foreseeable future due to the
trading price for the common stock, the Company's lack of working capital
and its revenue history. Failure to list the common stock on the AMEX, the
Nasdaq National Market, or the Nasdaq SmallCap Market, will impair the
liquidity of the common stock.
The Securities and Exchange Commission has adopted
regulations which generally define a "penny stock" to be any security that
1) is priced under $5.00, 2) is not traded on a national stock exchange or
on NASDAQ, 3) may be listed in the "pink sheets" or the NASD OTC
Bulletin Board, 4) is issued by a company that has less than $5 million in net
tangible assets and has been in business less than three years, or by a
company that has under $2 million in net tangible assets and has been in
business for at least three years, or by a company that has revenues of less
than $6 million for three years.
Penny stocks can be very risky: penny stocks are low-priced shares
of small companies not traded on an exchange or quoted on NASDAQ. Prices often
are not available. Investors in penny stocks are often unable to sell
stock back to the dealer that sold them the stock. Thus an investor may lose
his/her investment. The Company's common stock is a "penny stock" and thus
is subject to rules that impose additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors, unless the common stock is listed on
The Nasdaq SmallCap Market. Consequently, the "penny stock" rules may
restrict the ability of broker/dealers to sell Ohana's securities, and may
adversely affect the ability of holders of the common stock to resell their
shares in the secondary market. In addition, according to the SEC,
the market for "penny stocks" has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the
market for the stock by one or a few broker-dealers whom are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and
misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by
salespersons; (iv) excessive and undisclosed bid-ask differentials and
markups by selling broker-dealers after prices have been manipulated
to a desired level, along with the resulting collapse of those prices and
investor losses. The Company's management is aware of the abuses
that have occurred historically in the "penny stock" market.
Although the Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to the
Company's securities.
SOME OF THE INFORMATION IN THIS QUARTERLY REPORT
CONTAINS FORWARD-LOOKING STATEMENTS.
Some of the information in this quarterly report contains forward-looking
statements that involve substantial risks and uncertainties. These
statements can be identified by forward-looking words such as "may", "will",
"expect", "intend", "anticipate", "believe", "estimate" and "continue"
or similar words. Statements that contain these words should be reviewed
carefully because they:
- discuss management's expectations about the Company's future performance;
- contain projections of the Company's future operating results or
of its future financial condition; or
- state other "forward-looking" information.
Management believes it is important to communicate expectations
to the Company's stockholders. There may be events in the future, however,
that management is not able to predict accurately or over which it has
no control. The risk factors listed in this section, as well as any cautionary
language in this quarterly report, provide examples of risks, uncertainties
and events that may cause the Company's actual results to differ materially
from the expectations described in forward- looking statements. The
occurrence of any of the events described in these risk factors and
elsewhere in this uarterly report could have a material and adverse
effect on Ohana's business, results of operations and financial
condition and that upon the occurrence of any of these events, the trading
price of its common stock could decline.
ITEM 3. CONTROLS AND PROCEDURES
On November 11, 2004, management concluded its evaluation
of the effectiveness of the Company's disclosure controls and procedures.
As of that date, the Company's interim Chief Executive Officer and Chief
Financial Officer concluded that the Company maintains effective
disclosure controls and procedures that ensure information required to be
disclosed in the Company's reports under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Specifically, the disclosure controls and procedures assure that information
is accumulated and communicated to the Company's management,
including its interim Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure.
There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent
to the date of management's evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On January 2, 2004, the Company obtained financing in the form of a
line-of-credit for up to $30,000, which matured on June 30, 2004.
Interest on the loan accrued at 20% per annum and was payable on or before
June 30, 2004. As the Company had minimal financial resources, it elected to
exercise its option to repay the line-of-credit with the issuance of restricted
common stock at a discount of 30% to the average bid price for the last
10 days prior to conversion. On July 27, 2004, the outstanding balance on the
line-of-credit, including interest payable, of $31,661 was settled with the
issuance of 4,523,040 shares of restricted common stock valued at
$.007 per share. An additional 72,465 shares of restricted common stock
valued at $.007 per share were issued for accrued interest on a second line
of credit from the same source. The issuances were made in reliance upon
Section 4(2) of the Securities Act and were made without general solicitation
or advertising. The recipient was a sophisticated investor with access to all
relevant information necessary to evaluate the investment, and who represented
to the Company that the shares were being acquired for investment purposes.
On September 14, 2004, the Company executed a Stock Purchase
Agreement (the "SPA") with GarcyCo Capital Corp. ("GCCC"). The SPA calls
for the issuance by the Company of an aggregate of 200,000,000 shares of
common stock to GCCC in consideration of the payment of $500,000 in cash.
The Company is to receive the funds in $50,000 increments each quarter,
beginning October 15, 2004. The 200,000,000 shares will be held in escrow by
the Company and delivered on a pro-rata basis within 10 days
of receipt of each installment. All shares are restricted within the
meaning of Rule 144 under the Securities Act and must be held
indefinitely unless subsequently registered or qualified for exemption.
The SPA includes a provision that the purchase price per share,
and therefore the number of shares to be delivered at the
time of each installment payment, will be calculated for each installment
at the lesser of: (a) $0.0025 or (b) a 37.5% discount to the 10 day trailing
closing price of the Company's common stock at the time of each payment. As
part of the consideration for the SPA, GCCC has the right to elect one Board
Member and agreed to retain Catherine Thompson and Michael Avatar on the
Board of Directors and as consultants through the next fiscal year, ending
June 30, 2005. GCCC has not yet designated its representative on the
Board of Directors. At September 14, 2004, the Company had an aggregate of
152,553,778 shares of common stock outstanding on a fully-diluted basis.
Based on the price of the Company's common stock at that date, GCCC would
own and control approximately 56.73% of the Company's fully-diluted common
stock and 56.73% of the Company's outstanding common stock calculated
pursuant to Rule 13d-3(d)(1)(B) of the Securities Exchange Act of 1934.
As of the date of this filing the Company has received a total of
$53,788 from GCCC. The Company has delivered 42,609,216 shares of
common stock from escrow valued at an average price of $.00126 per share.
The balance of 157,390,784 shares remain in escrow. It is recognized that the
Company will be required to issue additional shares to satisfy the terms
of the agreement. Currently, the deficit in the number of shares held in
escrow is 21,094,016.
However, the Company effected a 500-for-one reverse stock split on
October 17, 2004, thereby enabling the issuance of the additional shares. The
issuance was made in reliance upon Section 4(2) of the Securities Act and was
made without general solicitation or advertising. The recipient
was a sophisticated investor with access to all relevant
information necessary to evaluate the investment, and who represented to
the Company that the shares were being acquired for investment purposes.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the first quarter of fiscal 2005, the following matters were
voted upon and approved by the written consent of shareholders representing
a majority of voting power of the Company:
On October 5, 2004, pursuant to the written consent the holders of
an aggregate of 243,534,112 shares of the Company's common stock, the
following actions were approved: 1) a 500-to-one reverse split of the issued
and outstanding shares of the Company's common stock and 2) the change
of the Company's name to "Vinoble, Inc."
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS.
Exhibit No. Description
---------- ----------------
2.1 Stock Purchase Agreement by and between Ohana
Enterprises, Inc. and GarcyCo Capital Corp.
Dated September 14, 2004
13a-15(e) and 15d-15(c)
31.02 Certification Pursuant to Section 906
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
OHANA ENTERPRISES, INC.
/s/ Catherine Thompson
------------------------------
Catherine Thompson
Interim Chief Executive Officer
and Chief Financial Officer
Exhibit 31.01
I, Catherine Thompson, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
OHANA ENTERPRISES, INC.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a - 15(e) and 15d - 15(e)
for the registrant and we have:
a. designed such disclosure controls and procedures or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this quarterly report
and our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of theperiod covered by this quarterly
report based on such evaluation; and
c. disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during; the
registrant's fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which is
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: November 22, 2004
/s/ Catherine Thompson
Catherine Thompson
Interim Chief Executive Officer
and Chief Financial Officer
Exhibit 32.01- Certification of Interim Chief Executive Officer
and Chief Financial Officer
CERTIFICATION OF INTERIM CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
I, Catherine Thompson, Interim Chief Executive Officer and
Chief Financial Officer of OHANA ENTERPRISES, INC (the "Registrant"),
do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant t
o Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
(1) the quarterly report on Form 10-QSB of the Registrant, to which
this certification is attached as an exhibit (the "Report"), fully
complies with the equirements of section 13(a) of the ecurities Exchange
Act of 1934 (15 U.S.C. 78m);
and
(2) the information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Registrant.
Date: November 22, 2004
/s/ Catherine Thompson
Catherine Thompson
Interim Chief Executive Officer and Chief Financial Officer