U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
December 31, 2002
[ ] 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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Issuer's telephone number, including area code
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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 Condensed Consolidated Financial Statements F-4
OHANA ENTERPRISES, INC. AND SUBSIDIARY
( A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
<table>
<caption>
<s> <c> <c>
June 30, December 31,
2002 2002
-------------- --------------
(Unaudited)
CURRENT ASSETS
Prepaid expenses $ - $ 8,333
Notes receivable-related parties - 200,000
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TOTAL ASSETS $ - $ 208,333
=============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable and accrued liabilities $ 25,918 $ 132,243
Accrued liabilities-Related Party - 33,191
Note Payable-Hudson Consulting - 200,000
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Total Current Liabilities 25,918 365,434
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 13,707,918, respectively
issued and outstanding 9,385 13,708
Stock subscription receivable (850) -
Additional Paid in Capital 19,025 94,505
Accumulated Deficit (53,478) (265,314)
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Total Stockholders' Deficit (25,918) (157,101)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ - $ 208,333
============= ============
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 Six Months Ended to
December 31, December 31, December 31,
2001 2002 2001 2002 2002
----------------- --------------- ------------
(Unaudited) (Unaudited) (Unaudited)
General and administrative expenses $ 26,566 $ 134,007 $ 27,861 $ 211,836 $ 265,314
-------- -------- -------- -------- -----------
Loss from Operations (26,566) (134,007) (27,861) (211,836) (265,314)
-------- --------- --------- --------- -----------
Net Loss $(26,566) (134,007) $(27,861) $(211,836) $ (265,314)
========= ========== ========= ========== ===========
Basic weighted average number of
Common shares outstanding 2,577,777 12,121,078 5,977,957 1,260,870
========= ========== ========= =========
Net loss per common share
Basic $ (0.01) $ (0.01) $ (0.00) $ (0.17)
========= ========== ========= =========
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
Six Months Ended (July 1, 2001)
December 31 to
2001 2002 December 31, 2002
(Unaudited) (Unaudited)
---------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(27,861) $ (211,836) $ (265,314)
Adjustments to reconcile net loss to net
cash provided by operating activities
Non-cash adjustments:
Issuance of stock for services 21,157 78,370 105,930
Changes in:
Prepaid expenses - (8,333) (8,333)
Accounts Payable and accrued liabilities 6,704 108,608 134,526
Accrued Liabilities-related parties - 33,191 33,191
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NET CASH USED BY OPERATING ACTIVITIES - - -
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NET CHANGE IN CASH - - -
CASH, beginning of year - - -
----------- ---------- ----------------
CASH, end of period $ - $ - $ -
=========== ========== ================
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
ACTIVITIES:
Issuance of stock for service $ 21,157 $ 78,370 $ 105,930
=========== ========= ===============
Issuance of common stock for
assumption of accounts payable $ - $ 1,433 $ 1,433
=========== ========= ==============
Offset of related parties
receivable with accounts payable $ - $ 850 $ 850
========== ========== ==============
</table>
The Accompanying Notes Are An Integral Part Of These Financial Statements
<page>F-3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Ohana Enterprises, 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 with 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 out-
placement 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 six months ended December 31, 2002 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 six months ended December 31, 2002, 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 8-K/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
As of December 31, 2002, the Company owes $100,000 in accrued liabilities
for consulting services rendered by management. The entire amount of $100,000 is
payable in the Company's common stock according to contract. The number of
common shares to be issued will be 1,000,000. The effect on the financials will
be an increase in common stock, par value $0.001, of $1,000 and an increase in
additional paid-in-capital of $99,000.
The Company also owes a total of $33,191 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 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 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 Six Months Ended December 31, 2002 Compared To Three and Six
Months Ended December 31, 2001
Revenues. The Company did not generate any revenue in the three and six
months ended December 31, 2002 and 2001. Since the October 2002 acquisition,
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 $134,007 in
general and administrative expenses for the three months ended December 31,
2002, compared to $26,566 for the three months ended December 31, 2001. The
Company incurred $211,836 in general and administrative expenses for the six
months ended December 31, 2002, compared to $27,861 for the six months ended
December 31, 2001. The increases in the three and six-month periods of 2002 were
due primarily to expenses incurred in the development of an infrastructure
subsequent to the October 2002 acquisition of VI. Included in general and
administrative expense for the three months ended December 31, 2002 was $78,370
of expense related to the issuance of an aggregate of 10,256,667 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 six months ended
December 31, 2001, 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 $134,007 and $211,836, respectively, for the three and six months
ended December 31, 2002, compared to a net loss of $26,566 and $27,861,
respectively, for the three and six months ended December 31, 2001. The net
loss per share was $0.01 and $0.17 for the respective three and six month
periods ended December 31, 2002, from $0.01 and $0.00 for the respective three
and six months periods ended December 31, 2001.
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
costs. As shown in the accompanying financial statements, the Company incurred
a net loss of $134,007 and $211,836, for the respective three and six month
periods ended December 31, 2001. 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 or 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 also 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
ITEM 3. 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.
5
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
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.
OHANA ENTERPRISES, INC.
/s/ Gerald Nolan
Date: May 20, 2003 --------------------------
Gerald Nolan
Chief Executive Officer
CERTIFICATIONS
I, Gerald Nolan, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB/A of OHANA
ENTERPRISES, INC.;
2. Based on my knowledge, this amended 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 amended 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 amended 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 amended 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 amended quarterly report (the "Evaluation Date"); and
c. presented in this amended 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
amended 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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Gerald Nolan
Chief Executive Officer
=========================================
I, Catherine Thompson, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB/A of OHANA
ENTERPRISES, INC.
2. Based on my knowledge, this amended 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 amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended 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 amended
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 amended 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 amended quarterly report (the "Evaluation Date"); and
c. presented in this amended 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
amended 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
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Catherine Thompson
Secretary and Chief Financial Officer
============================