UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Originally filed: 10-31-2002)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 7, 2003
Ohana Enterprises, Inc.
------------------------------
(Exact name of registrant as specified in its charter)
Delaware
-----------
(State or other jurisdiction of incorporation or organization)
001-07894 95-2312900
---------- ---------
(Commission File Number) (IRS Employer Identification Number)
2899 Agoura Road, #168 Westlake Village, CA 91361
--------------------------
(Address of principal executive offices)
(818) 991-6020
---------------
(Registrant's telephone number, including area code)
Erly Industries, Inc.
Torchmail Communications, Inc.
------------------------------------
Previous names of the Registrant
==========================================================================
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Pro Forma Financial Information and Exhibits.
--------------------------------------------
Pro Forma financial information relating to Ohana Enterprises, Inc.,
a Delaware corporation ("Company") and giving effect to the Company's
acquisition of all outstanding shares of common stock of Virtual Interviews,
Inc., a Nevada corporation, is provided on pages F-2 through F-6 of this
amended Report.
(b) Financial Statements of the Business Acquired.
----------------------------------------------
Historical financial statements for Virtual Interviews are provided
on pages F-7 through F-16 of this amended Report.
(c) Exhibits
--------
None
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amended report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 07, 2003
Ohana Enterprises, Inc.
A Delaware Corporation
By: /s/ Catherine Thompson
---------------------------------
Catherine Thompson
Chief Financial Officer, Secretary
=====================================================================
INDEX TO FINANCIAL STATEMENTS
Ohana Enterprises and Subsidiary
Proforma Consolidated Financial Statements
(Unaudited)
Financial Statements: Page
- ------------------------- ------
Proforma Explanatory Headnote F-2
Unaudited Proforma Consolidated Balance Sheet F-3
Unaudited Proforma Consolidated Statements of Operations
For the Period Ended September 30, 2002 F-4
For the Year Ended June 30, 2002 F-5
Notes to Unaudited Proforma Consolidated Financial Statements F-6
Virtual Interviews Independent auditors' report F-7
Consolidated Financial Statements: Balance Sheet F-8
Statement of Operations F-9
Statement of Changesin Stockholders Equity F-10
Statement of Cashflows F-11
Notes to Consolidated Financial Statements F-12
=====================================================================
Ohana Enterprises, Inc. and Subsidiary Proforma Explanatory Headnote
The following unaudited proforma consolidated financial statements give effect
to the reverse acquisition by Virtual Interviews (the "Company") of Torchmail
Communications, Inc. ("Torchmail") and is based on the estimates and assumptions
set forth herein and in the notes to such statement. This proforma information
has been prepared utilizing the historical financial statements of the Company
and notes thereto, which are incorporated by reference herein. The proforma
financial data does not purport to be indicative of the results which actually
would have been obtained had the acquisition been effected on the dates
indicated or the results which may be obtained in the future.
The proforma consolidated statements of operations for the period ended
September 30, 2002 and for the year ended June 30, 2002 include the operating
results of the Company and Torchmail for such periods.
On October 18, 2002 the Company merged with Torchmail in exchange for 9,384,543
shares of Torchmail. Shortly thereafter, Torchmail changed its name to Ohana
Enterprises, Inc.
F-2
- -------------------------------------------------------------------------
Ohana Enterprises, Inc. and Subsidiary
Unaudited Proforma Consolidated Balance Sheet
September 30, 2002
<table>
<caption>
<s> <c> <c> <c> <c>
Torchmail Virtual Proforma Proforma
Communications, Inc. Interviews, Inc. Adjustments Consolidated
------------------- ----------------- ------------- -----------
ASSETS
Current Assets
Notes receivable related party $ - $ - $ 200,000 $ 200,000
Investments, available for sale 12,500 - (12,500) -
------------------ ----------------- -------------- -------------
TOTAL ASSETS $ 12,500 $ - $ 187,500 $ 200,000
================== ================= ============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 17,964 $ 67,040 $ (17,964) $ 67,040
Notes payable-Hudson Corporation - - 200,000 200,000
Related party payable 21,332 - - (21,332)
----------------- ----------------- -------------- -------------
TOTAL LIABILITIES $ 39,296 $ 67,040 $ 160,704 $ 267,040
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock - - - -
Common Stock 3,773 9,385 - 13,158
Additional paid-in-capital 181,922 19,025 (185,695) 15,252
Accumulated deficit (212,491) (95,450) 212,491 (95,450)
----------------- ----------------- --------------- -------------
Total stockholder's Deficit (26,796) (67,040) 26,796 (67,040)
----------------- ----------------- --------------- -------------
TOTAL LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIT) $ 12,500 $ - $ 187,500 $ 200,000
================= ================= =============== =============
</table>
See Accpanying Notes To Unaudited Proforma Conslidated Financial Statements
F-3
Ohana Enterprises, Inc. and Subsidiary
Unaudited Proforma Consolidated Statement of Operations
For the quarter Ended September 30, 2002
<table>
<caption>
<s> <c> <c> <c> <c>
Torchmail Virtual Proforma Proforma
Communications, Inc. Interviews, Inc. Adjustments Consolidated
------------------- ----------------- ------------- -----------
Sales $ - $ - $ - $ -
General and administrative expenses 350 41,972 (350) 41,972
------------------- ----------------- ------------- -----------
Loss from operations (350) (41,972) 350 (41,972)
------------------ ----------------- -------------- -----------
Net loss $ (350) $ (41,972) 350 (41,972)
================== ================= ============== ============
Basic weighted average number
of common shares outstanding 3,773,000 9,384,543 13,157,543
================== ================= ============
Net loss per common share
Basic $ (0.003)
============
</table>
See Accpanying Notes To Unaudited Proforma Conslidated Financial Statements
F-4
Ohana Enterprises, Inc. and Subsidiary
Unaudited Proforma Consolidated Statement of Operations
For the years ended March 31, 2002 and June 30, 2002
<table>
<caption>
<s> <c> <c> <c> <c>
Torchmail Virtual
Communications, Inc. Interviews, Inc.
------------------- -----------------
For the year ended Proforma Proforma
March 31, 2002 June 30, 2002 Adjustments Consolidated
------------------- ------------------ ------------- -------------
Sales $ - $ - $ - $ -
General and administrative expenses 82,844 53,478 (82,844) 53,478
------------------- ----------------- ------------- -----------
Loss from operations (82,844) (53,478) 82,844 (53,478)
------------------ ----------------- -------------- -----------
Net loss $ (82,844) $ (53,478) 82,844 (53,478)
================== ================= ============== ============
Basic weighted average number
of common shares outstanding 741,000 5,112,391 5,853,391
================== ================= ============
Net loss per common share
Basic $ (0.009)
============
See Accpanying Notes To Unaudited Proforma Conslidated Financial Statements
</table>
F-5
Ohana Enterprises, Inc. and Subsidiary
Notes to Unaudited Proforma
Consolidated Financial Statements
NOTE 1 - PROFORMA ADJUSTMENTS
The adjustments relating to the unaudited proforma consolidated statements of
operations are computed assuming the reverse merger with Torchmail was
consummated at the beginning of the period presented. The adjustments relating
to the unaudited proforma consolidated balance sheet assumes that the merger
occurred on September 30, 2002.
NOTE 2 - ACQUISITION OF SUBSIDIARY
The acquisition is recorded using the purchase method.
NOTE 3 - PAYMENT OF LIABILITIES
The unaudited proforma consolidated balance sheet reflects the fact that assets
and liabilities were not assumed in the acquisition.
F-6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Virtual Interviews, Inc.
Westlake Village, CA
We have audited the accompanying balance sheet of Virtual Interviews, Inc. (the
"Company") (a Development Stage Company) as of June 30, 2002 and the related
statement of operations, stockholders' equity (deficit) and cash flows from July
1, 2001 (inception) to June 30, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referenced to above present fairly, in
all material respects, the financial position of the Company as of June 30,
2002, and the results of their operations and cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $53,478 during the year ended June 30, 2002,
and as of that date, had an accumulated deficit of $53,478. As described in
Note 3 to the financial statements, the Company's management is attempting to
raise additional capital through various means, the success of which is
uncertain. Thus, the condition of the Company raises substantial doubt about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Pasadena, California
April 30, 2003
/s/ Lucas, Horsfall, Murphy & Pindroh, LLP
F-7
Virtual Interviews, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 2002
ASSETS
TOTAL ASSETS $ -
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities 25,918
---------
Total Current Liabilities 25,918
---------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 250,000,000 authorized,
9,384,543 issued and outstanding 9,385
Stock subscription receivable (850)
Additional paid-in capital 19,025
Accumulated deficit (53,478)
---------
Total stockholders' equity (deficit) (25,918)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -
==========
The accompanying notes are an integral part of this financial statement.
F-8
Virtual Interviews, Inc.
(A Development Stage Company)
Statement of Operations
For the Year Ended June 30, 2002
and
the Period July 1, 2001(inception) to June 30, 2002
July 1, 2001
(inception)
to June 30, 2002
-----------------
General and administrative expenses $ 53,478 $ 53,478
--------- ---------
Loss from operations (53,478) (53,478)
--------- ---------
Net loss $ (53,478) $ (53,478)
========= =========
Basic weighted average number of
common shares outstanding 5,112,391 5,112,391
========= ==========
Net loss per common share Basic $ (0.01) $ (0.01)
========= ==========
The accompanying notes are an integral part of this financial statement.
F-9
Virtual Interviews, Inc.
(A Development Stage Company)
Statements of Stockholder's Equity (deficit)
For the Year Ended June 30, 2002
<table>
<caption>
<s> <c> <c> <c> <c> <c> <c>
Stock
Additional Receivable Accumulated
No. of Shares Amount Paid-in-Capital Subscription (Deficit) Total
-------------- -------- ---------------- ------------- ---------- ------
Balances at July 01, 2001 - $ - $ - $ - $ - $ -
Issuance of common stock for
services:
November 30, 2001
at $0.003 per share 6,966,667 6,967 14,190 - - 21,157
May 31, 2002
at $0.003 per share 1,834,543 1,835 3,668 - - 5,503
June 30, 2002 at
$0.003 per share 300,000 300 600 - - 900
Sale of common stock
November 30, 2001 at
$0.003 per share 283,333 283 567 (850) - -
Net Loss - - - - (53,478) (53,478)
----------- --------- ------------------ ------------ ------------ --------
Balances at June 30, 2002 9,384,543 $ 9,385 $ 19,025 $ (850) $ (53,478) $(25,918)
=========== ========= ================= ============= ============ =========
</table>
The accompanying notes are an integral part of this financial statement.
F-10
Virtual Interviews, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Year Ended June 30, 2002
and
the period from July 1, 2001 (inception)
to June 30, 2002
July 1, 2001
(inception)
to June 30, 2002
-----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (53,478) $ (53,478)
Adjustments to reconcile net income
to net cash provided by operating
activities
Non-cash adjustments
Issuance of stock for services 27,560 27,560
Changes in:
Accounts Payable and Accrued Liabilities 25,918 25,918
---------- -----------
NET CASH USED BY OPERATING ACTIVITIES - -
---------- -----------
NET CHANGE IN CASH - -
CASH, beginning of year - -
----------- -----------
CASH, end of year $ - $ -
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING ACTIVITIES:
Stock sold for subscription receivable $ 850 $ 850
=========== ============
The accompanying notes are an integral part of this financial statement.
F-11
Virtual Interviews, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization and Business
- --------------------------
Virtual Interviews, Inc. was incorporated in the State of Nevada on July 1,
2001. The Company is in the development stage, as defined in Financial
Accounting Standards Board Statement No. 7. The Company's year end is June 30.
Virtual Interviews is a company that provides services and products within the
market segment of human resource professional services and outsourcing. Virtual
Interviews provides employers, recruiters and search firms the tools and
services to facilitate the initial screening and skills assessment of job
candidates. Virtual Interviews will conduct the candidate interview at one of
its professional office locations, capture the interview on video, and stream it
to the client on demand over a secure private intranet. Candidate interviews
will be archived for client review. Human Resource Managers will be able to
designate viewing permissions to other hiring managers within the organization.
The Company's service is targeted at the professional, managerial, and
specialized hiring needs of Global 2000 companies and private industry. The
service will be distributed directly through the Virtual Interviews sales force
and indirectly through distribution partners such as recruiting agencies and
executive out-placement firms.
Acquisition
- ------------
On October 18, 2002, all of the outstanding capital stock of Virtual Interviews,
Inc. was acquired by Torchmail Communications, Inc. (Torchmail). In connection
with this transaction, all of the shares of Virtual Interviews, Inc., were
exchanged for 9,384,543 shares of Torchmail with Torchmail as the surviving
corporation, which changed its name to Ohana Enterprises, Inc.
Revenue Recognition
- -------------------
Service revenue is recognized ratably over the contractual period or as services
are performed. An initial setup fee will be charged and will be charged to
revenue ratably over the period for which the services are provided. When
other significant obligations remain after services are delivered, revenue is
recognized only after such obligations are fulfilled. No revenue were recognized
for the year ended.
F-12
Virtual Interviews, Inc.
(A Development Stage Company)
Notes to Financial Statements
Advertising Costs
- ------------------
Advertising and promotion costs are expensed as incurred.
Research and Development
- ------------------------
Research and development expenditures are charged to operations as incurred.
Stock Based Compensation
- ------------------------
The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). This standard requires the Company to adopt the
"fair value" method with respect to stock-based compensation of consultants and
other non-employees.
Valuation of the Company's Common Stock
- ---------------------------------------
Unless otherwise disclosed, all stock based transactions entered into by the
Company have been valued at fair value of the consideration received or at the
market value of the Company's common stock on the date the transaction was
entered into.
Loss Per Share
- ---------------
Basic (loss) per share excludes any dilutive effects of options, warrants and
convertible securities. Basic (loss) per share is computed using the weighted-
average number of common shares outstanding during the period. Diluted earnings
per share is computed using the weighted-average number of common and common
stock equivalent shares outstanding during the period. Common equivalent shares
are excluded from the computation if their effect is antidilutive.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amounts of cash, accounts payable, and notes payable approximate
fair value because of the short maturity of these items.
Statement of Cash Flows
- ------------------------
For the purpose of the statement of cash flows, cash includes amounts "on-hand"
and amounts deposited with financial institutions.
Use of Estimates in Preparation of Financial Statements
- --------------------------------------------------------
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets, liabilities, revenue, expenses and
disclosure of contingent assets and liabilities to prepare these financial
statements in accordance with generally accepted accounting principles.
Accordingly, actual results may differ from those estimates.
2. INCOME TAXES
Income taxes are provided pursuant to SFAS No. 109 Accounting for Income Taxes.
This statement requires the use of an asset and liability approach for financial
reporting for income taxes. If it is more likely than not that some portion or
all of a deferred tax asset will not be realized, a valuation allowance is
recognized. Accordingly, as the realization and use of the net operating loss
carryforward is not probable at June 30, 2002, the tax benefit of the loss
carryforward is offset by a valuation allowance of the same amount.
F-13
Virtual Interviews, Inc.
(A Development Stage Company)
Notes to Financial Statements
The composition of the Company's deferred tax assets is as follows:
Total deferred tax assets $ 11,968
Total valuation allowance (11,968)
---------------
Total deferred tax assets $ -
===============
The tax effects of temporary differences and carryforwards that give rise to
deferred assets are as follows:
Deferred tax assets:
Net operating loss carryforwards $ 11,968
--------------
Gross deferred tax assets 11,968
Valuation allowance (11,968)
---------------
Net deferred tax assets $ -
================
The components of deferred income tax expense (benefit) were as follows:
Temporary differences:
Net operating loss carryforward $ 11,968
Increase in valuation allowance (11,968)
----------------
$ -
================
No provision for income taxes has been recorded for the period ended June 30,
2002, as the Company has incurred losses during this period.
The Company has approximately $11,968 of federal and state loss carryforwards
available to reduce future federal and state tax liabilities which will
expire in 2023.
3. GOING CONCERN AND MANAGEMENT PLANS
The Company has not had any revenues and has experienced operating losses since
inception primarily caused by its continued development and marketing costs. As
shown in the accompanying financial statements, the Company incurred a net loss
of $53,478 for the year ended June 30, 2002 and as of June 30, 2002 has an
accumulated deficit of $53,478. Those factors create an uncertainty and raise
substantial doubt about the Company's ability to continue as a going concern.
Management of the Company intends to pursue various means of obtaining
additional capital. 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 profitable operations.
The Company is currently devoting its efforts to raising capital and to second
generation development of the Virtual Interviews service. Virtual Interviews
is seeking potential partners to enter into strategic alliances for sales,
distributions and customer service. The Company has identified one such
partner, and is finalizing the terms of the agreement. This relationship would
benefit Virtual Interviews through the acceleration of product deployment and
the minimization initial cost outlays. Virtual Interviews has initialized the
design of software requirements specifications for a second generation product
with a third party developer. Other efforts are focused on building the Virtual
Interviews Board of Directors and Advisors in an attempt to bring additional
experience and industry expertise to the Company.
F-14
Virtual Interviews, Inc.
(A Development Stage Company)
Notes to Financial Statements
4. SUBSEQUENT EVENTS
Acquisition
On October 18, 2002 all of the outstanding capital stock of Virtual Interviews,
Inc. was acquired by Torchmail Communications, Inc. (Torchmail). In connection
with this transaction, all of the shares of Virtual Interviews, Inc., were
exchanged for 9,384,543 shares of Torchmail with Torchmail as the surviving
corporation, which changed its name to Ohana Enterprises, Inc. As part of the
consideration for the acquisition the Company assumed the obligation of certain
Virtual Interviews, Inc. shareholders to Hudson Consulting Group, Inc. in the
amount of $200,000, pursuant to the purchasers acquisition of 2,811,900 shares
of Torchmail common stock. This stock exchange transaction is treated as an
acquisition by the Company of the net tangible book value of the assets of
Torchmail, at the date of the acquisition.
Legal Proceedings
On January 16, 2003, Ohana Enterprises, Inc., notified Hudson Consulting Group,
Inc. ("Hudson") of the Company's intent to offset payments due to Hudson under
that certain Stock Purchase Agreement, dated as of August 16, 2002 (the
"Agreement"). The offset, permitted under the Agreement, was effected by the
Company due to certain alleged misrepresentations and omissions made by Hudson
in the Agreement.
The payments to Hudson were incurred by the Company as part of the consideration
for Torchmail's acquisition of the Company in October 2002. The Company assumed
a $200,000 note payable by certain shareholders of the Company to Hudson (the
"Note Payable"), representing payments due to Hudson pursuant to the certain
shareholders acquisition from Hudson of 2,811,900 shares of the Company's common
stock. Payment of the Note Payable is secured by a Stock Pledge Agreement for
two thirds of the shares transferred to the Company and two thirds of the
9,384,543 shares of Torchmail's common stock issued to the Company's
shareholders in the acquisition referenced above (collectively, the "Pledged
Stock"). The Note Payable calls for a payment of $100,000 on or before the 120th
day following the closing of the Hudson stock purchase (the "Closing") and an
additional payment of $100,000 on or before the 180th day following the Closing.
On February 27, 2003, Hudson filed a Schedule 13D with the Commission
alleging beneficial ownership of an aggregate of an aggregate of 11,407,268
shares of the Company's common stock, and claiming a breach of the Agreement by
the Company and a corresponding transfer of voting rights in the Pledged Stock.
The Schedule 13D does not reference the offset permitted under Section 6.5.
The Company believes that it has complied with all conditions required for the
offset under the Agreement, and that therefore no default has occurred and that
voting rights in and to the Pledged Stock remains with the Purchasers. It will
vigorously contest any attempt by Hudson or any of its affiliates to exercise
voting or other control over the Pledged Stock.
F-15