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
March 31, 2003
[ ] 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. (FKA TORCHMAIL COMMUNICATIONS, 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.)
2899 Agoura Road, #168, Westlake Village, CA 91361
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(Address of Principal Executive Offices) (Zip Code)
(818) 991-6020
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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 __
The number of outstanding shares of the issuer's common stock, $0.001 par
value ( the only class of voting stock), as of March 31, 2003 was 16,307,918.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(a) Condensed Consolidated Financial Statements
--------------------------------------------
Condensed consolidated financial information
relating to Ohana Enterprises, Inc., a Delaware
corporation ("Company") and its subsidiary,
Virtual Interviews, Inc., a Nevada corporation,
is provided on pages F-1 through F-4 of this amended Report.
Financial Statements: Page
--------------------------------------------
Condensed Consolidated Financial Statements:
Balance Sheet F-1
Statements of Operations F-2
Statement of Cash Flows F-3
Notes to Financial Statement F-4
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OHANA ENTERPRISES, INC.and Subsidary
( A Development Stage Company)
UNAUDITED CONSOLIDATED BALANCE SHEET
<table>
<caption>
<s> <c> <c>
June 30, March 31,
2002 2003
-------------- --------------
Unaudited
CURRENT ASSETS
Cash $ - $ 4,033
Prepaid expenses - 93,468
Notes receivable-related parties - 200,000
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TOTAL ASSETS $ - $ 297,501
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LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable and accrued liabilities $ 25,918 $ 40,044
Accrued liabilities-Related Party - 28,358
Note Payable-Hudson Consulting - 200,000
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Total Current Liabilities 25,918 268,402
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.001 par value,
10,000,000 shares authorized;
issued and outstanding: nil - -
Common Stock, $.001 par value,
200,000,000 shares authorized;
9,384,543 and 16,307,918, respectively
issued and outstanding 9,385 16,308
Stock subscription receivable (850) -
Additional Paid in Capital 19,025 406,905
Accumulated Deficit (53,478) (394,114)
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Total Stockholders' Deficit (25,918) 29,099
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ - $ 297,501
The Accompanying Notes Are An Integral Part Of These Financial Statements
</table>
F-1
OHANA ENTERPRISES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<table>
<caption>
<s> <c> <c> <c>
From Inception
(July 1, 2001)
Three Months Ended Nine Months Ended to
March 31, March 31, March 31
2002 2003 2002 2003 2003
----------------- --------------- ------------
(Unaudited) (Unaudited) (Unaudited)
General and administrative expenses $ 7,904 $ 128,800 $ 34,470 $ 340,636 $ 394,114
-------- -------- -------- -------- -----------
Loss from Operations (7,904) (128,800) (34,470) (340,636) (394,114)
-------- --------- --------- --------- -----------
Net Loss $ (7,904) (128,000) $(34,470) $(340,636) $ (394,114)
========= ========== ========= ========== ===========
Basic weighted average number of
Common shares outstanding 7,250,000 14,775,696 3,228,102 8,867,725
========= ========== ========= =========
Net loss per common share
Basic $ (0.00) $ (0.01) $ (0.00) $ (0.04)
========= ========== ========= =========
The Accompanying Notes Are An Integral Part Of These Financial Statements
</table>
F-2
OHANA ENTERPRISES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<table>
<caption>
<s> <c> <c>
From Inception
Nine Months Ended (July 1, 2001)
March 31 to
2001 2002 March 31, 2002
(Unaudited) (Unaudited)
---------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(34,470) $ (340,636) $ (394,114)
Adjustments to reconcile net loss to net
provided by operating activities
Non-cash adjustments:
Issuance of stock for services 21,157 368,370 395,930
Changes in:
Prepaid expenses - (93,468) (93,468)
Accounts Payable and accrued liabilities 13,313 16,409 42,327
Accrued Liabilities-related parties - 28,358 28,358
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NET CASH USED BY OPERATING ACTIVITIES - (20,967) (20,967)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock - 25,000 25,000
---------- -------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 25,000 25,000
NET CHANGE IN CASH - 4,033 4,033
CASH, beginning of year - - -
---------- --------- ----------
CASH, end of period $ - $ 4,033 $ 4,033
========== ========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
ACTIVITIES:
Issuance of stock for service $ 21,157 $ 368,370 $ 395,930
=========== ========= ===========
The Accompanying Notes Are An Integral Part Of These Financial Statements
</table>
1. ORGANIZATION
Ohana Enterprises, Inc., a Delaware corporation (together with its wholly-owned
subsidiary, the "Company") 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.
Ohana Enterprises provides services and products within the market segment of
human resource professional services and outsourcing. The Company provides
employers, recruiters and search firms the tools and services to facilitate the
initial screening and skills assessment of job candidates. Ohana Enterprises
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 Ohana Enterprises sales force and indirectly
through distribution partners such as recruiting agencies and executive
outplacement firms.
2. BASIS OF PRESENTATION
The accompanying unaudited financial statements include the accounts of Ohana
Enterprises, Inc. and its wholly-owned subsidiary. 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
nine months ended March 31, 2003 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 nine months ended March 31, 2003, are not
necessarily indicative of the results of operations for the full year ending
June 30, 2003. These unaudited financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's filing on Form 8K/A filed on May 7, 2003.
The preparation of 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. RELATED PARTY PAYABLES
The Company owes a total of $28,358 to management and consultants as
reimbursement for expenses incurred during the development phase of operations.
These are non interest-bearing obligations of the Company.
F-4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS 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 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
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
Virtual 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 Virtual Interviews 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 is a wholly-owned subsidiary of the Company, and is the
only operational business within the Company.
2
The Company provides services and products within the market segment of
human resource professional services and outsourcing. The Company provides
employers, recruiters and search firms the tools and services to facilitate the
initial screening and skills assessment of job candidates. The Company 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.
RESULTS OF OPERATIONS
Three and Nine Months Ended March 31, 2003 Compared To Three and Nine
Months Ended March 31, 2002
Revenues. The Company did not generate any revenue in the three and
nine months ended March 31, 2003 and 2002. Since the October 2002 acquisition
of VI, the Company's focus has been on the creation of an infrastructure and the
development of the VI suite of products. The Company has been in the
development stage since July 2001.
General and Administrative Expenses. The Company incurred $128,800 in
general and administrative expenses for the three months ended March 31, 2003,
compared to $7,904 for the three months ended March 31, 2002. The Company
incurred $340,636 in general and administrative expenses for the nine months
ended March 31, 2003, compared to $34,470 for the nine months ended March 31,
2002. The increases in the three and nine-month periods in 2003 were due
primarily to expenses incurred in the continued development of Virtual
Interviews' infrastructure, services and products. Included in general and
administrative expense for the three months ended March 31, 2003 was $290,000 of
expense related to the issuance of an aggregate of 2,400,000 shares of common
stock to employees and consultants in lieu of cash compensation. Employees and
consultants receiving stock agreed to receive these securities, in lieu of cash,
for payment of services rendered. In the nine months ended March 31, 2002,
similar non-cash compensation equaled $21,157 for the issuance of an aggregate
of 6,966,667 shares of common stock.
3
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. Management expects to commence sales and marketing efforts in
the second half of 2003.
Net Loss. As a result of the foregoing factors, the Company's net loss
increased to $128,800 and $340,636, respectively, for the three and nine months
ended March 31, 2003, compared to a net loss of $7,904 and $34,470,
respectively, for the three and nine months ended March 31, 2002. The net loss
per share was $0.01 and $0.04 for the respective three and nine month periods
ended March 31, 2003, from $0.00 and $0.01 for the respective three and nine
months periods ended March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company has not had any revenues to date, 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 $128,800 and $340,636, for the respective three and nine
month periods ended March 31, 2003. Those factors create an uncertainty and
raise 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 profitable operations.
The Company is currently devoting its efforts to raising capital and to
second generation development of the Virtual Interviews service. Management
anticipates that additional capital will be derived from public or private
placements of equity and debt securities; however, to date the Company has not
entered into any agreements or other arrangements providing such additional
capital. Virtual Interviews is also seeking potential partners to enter into
strategic alliances for sales, distributions and customer service. The Company
has identified one such partner, and is currently finalizing the terms of the
agreement. This relationship would benefit Virtual Interviews through the
acceleration of product deployment with minimal 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 Company's Board of Directors and Board of Advisors in an
attempt to bring additional experience and industry expertise to the Company.
4
CONTROLS AND PROCEDURES
On May 15, 2003, management concluded its evaluation of the effectiveness
of the Company's disclosure controls and procedures. As of that date, the
Company's 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 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.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit No. Title of Exhibit
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99.01 Certification of Chief Executive Officer
99.02 Certification of Chief Financial Officer
6
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
OHANA ENTERPRISES, INC.
/s/Gerard Nolan
Date: May 20, 2003 ----------------------
Gerard Nolan
Chief Executive Officer
CERTIFICATIONS
I, Gerald Nolan, 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 annual 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 - 14 and 15d - 14) for the registrant and we have:
a. designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; 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; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 20, 2003
/s/Gerald Nolan
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Gerlad Nolan
Chief Executive Officer
7
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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 annual
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 - 14 and 15d - 14) for the registrant and we have:
a. designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing
date of this report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; 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; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 20, 2003
/s/ Catherine Thompson
--------------
Catherine Thompson
Secretary and Chief Financial Officer
8
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Exhibit 99.01-Certification of Chief Executive Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I,Gerald Nolan, Chief Executive Officer of OHANA ENTERPRISES, INC (the
"Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted
pursuant to 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 requirements of section 13(a) of the Securities
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: May 20, 2003
/s/Gerald Nolan
- ------------------
Gerald Nolan
Chief Executive Officer
============================
Exhibit 99.02-Certification of Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Catherine Thompson, Chief Executive Officer of OHANA ENTERPRISES, INC. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted
pursuant to 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 requirements of section 13(a) of the Securities
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: May 20, 2003
/s/ Catherine Thompson
--------------
Catherine Thompson
Secretary and Chief Financial Officer