UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2019
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission File Number: 333-229710
OXFORD NORTHEAST, LTD.
(Exact name of registrant as specified in its charter)
New York | 83-1567259 | |
(State of incorporation) | (I.R.S. Employer Identification No.) |
400 Rella Drive, Suite 165, Suffern, New York | 10901 | |
(Address of principal executive offices) | (Zip Code) |
(888) 813-7289
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesx No¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesx No¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨ | Accelerated filer¨ | |
Non-accelerated filer¨ | Smaller reporting companyx | |
Emerging growth companyx |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yesx No¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares of the issuer's common stock issued and outstanding as of December 31, 2019 was 10,000,000 shares. No market value has been computed based upon the fact that no active trading market has been established as of December 31, 2019.
Documents Incorporated by Reference: None
TABLE OF CONTENTS
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FINANCIAL INFORMATION
OXFORD NORTHEAST LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2019 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 17,850 | $ | 26,957 | ||||
Prepaid expenses and other current assets | 491 | 6,100 | ||||||
Total Current Assets | 18,341 | 33,057 | ||||||
Non-Current Assets | ||||||||
Capitalized software, net | 218,061 | 214,476 | ||||||
Property and equipment, net | 214,959 | 261,128 | ||||||
Total Assets | $ | 451,361 | $ | 508,661 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 31,828 | $ | 52,507 | ||||
Client deposits | - | 50,000 | ||||||
Total Current Liabilities | 31,828 | 102,507 | ||||||
Long Term Liabilities | ||||||||
Accrued interest | - | 8,120 | ||||||
Notes payable - Related Parties, net | 565,000 | 606,000 | ||||||
Total Liabilities | 596,828 | 716,627 | ||||||
Stockholders’ Deficit | ||||||||
Common stock, $0.0001 par value, 50,000,000 shares authorized, 10,000,000 shares issued and outstanding | 1,000 | 1,000 | ||||||
Preferred Stock, $0.0001 par value, 10,000,000 shares authorized, zero shares issued and outstanding | - | - | ||||||
Accumulated deficit | (146,467 | ) | (208,966 | ) | ||||
Total Stockholders’ Deficit | (145,467 | ) | (207,966 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 451,361 | $ | 508,661 |
See accompanying notes to these financial statements
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OXFORD NORTHEAST LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For The Three Months Ended December 31, | ||||||||
2018 | 2019 | |||||||
Revenues | $ | - | $ | - | ||||
Operating Expenses | ||||||||
General and administrative | 14,003 | 40,576 | ||||||
Depreciation and amortization expense | - | 18,476 | ||||||
Total Operating Expenses | 14,003 | 59,052 | ||||||
Loss from Operations | (14,003 | ) | (59,052 | ) | ||||
Other Expense | ||||||||
Interest expense | (631 | ) | (3,447 | ) | ||||
Loss before income taxes | (14,634 | ) | (62,499 | ) | ||||
Provision for income taxes | - | - | ||||||
Net Loss | $ | (14,634 | ) | $ | (62,499 | ) | ||
Basic and diluted loss per share | $ | (0.00 | ) | $ | (0.01 | ) | ||
Average number of common shares outstanding - basic and diluted | 10,000,000 | 10,000,000 |
See accompanying notes to these financial statements
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OXFORD NORTHEAST LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
Common Stock | Additional | Accumulated | Total Stockholders' | |||||||||||||||||
Shares | Amount | Paid-In Capital | Deficit | Deficit | ||||||||||||||||
Balance at September 30, 2018 | 10,000,000 | $ | 1,000 | $ | - | $ | (7,437 | ) | $ | (6,437 | ) | |||||||||
Net loss | - | - | - | (14,634 | ) | (14,634 | ) | |||||||||||||
Balance at December 31, 2018 | 10,000,000 | $ | 1,000 | $ | - | $ | (22,071 | ) | $ | (21,071 | ) | |||||||||
Balance at September 30, 2019 | 10,000,000 | $ | 1,000 | $ | - | $ | (146,467 | ) | $ | (145,467 | ) | |||||||||
Net loss | - | - | - | (62,499 | ) | (62,499 | ) | |||||||||||||
Balance at December 31, 2019 | 10,000,000 | $ | 1,000 | $ | - | $ | (208,966 | ) | $ | (207,966 | ) |
See accompanying notes to these financial statements
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OXFORD NORTHEAST LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For The Three Months Ended December 31, | ||||||||
2018 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (14,634 | ) | $ | (62,499 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | - | 18,476 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other current assets | - | (5,609 | ) | |||||
Accounts payable and accrued expenses | 4,406 | 25,870 | ||||||
Client deposits | - | 50,000 | ||||||
Accrued interest | - | 2,929 | ||||||
Net cash (used in) provided by operating activities | (10,228 | ) | 29,167 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capitalization of software costs | (41,800 | ) | - | |||||
Purchase of equipment | - | (61,060 | ) | |||||
Net cash used in investing activities | (41,800 | ) | (61,060 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from notes payable - Related party, net | 60,252 | 41,000 | ||||||
Net cash provided by financing activities | 60,252 | 41,000 | ||||||
Net increase in cash and cash equivalents | 8,224 | 9,107 | ||||||
Cash and cash equivalents, beginning of period | 26,688 | 17,850 | ||||||
Cash and cash equivalents, end of period | $ | 34,912 | $ | 26,957 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | - | $ | 519 | ||||
Cash paid for taxes | $ | - | $ | - |
See accompanying notes to these financial statements
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OXFORD NORTHEAST LTD. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Oxford Northeast LTD. (the “Company” or “Oxford Northeast”) is a smaller reporting company focused on developing its Zero Vacancy app and providing digital signage screens to salons in the NY Metro area.
Oxford Northeast was formed on August 10, 2018, in the state of New York. Our goal is to market and advertise the Zero Vacancy app. This app is being designed to help landlords rent vacant apartments, offices and retail spaces at discounted rates. We intend to enter into agreements with landlords who have vacancies and who agree to accept lower rent payments for imperfect apartments, offices and retail spaces. These imperfections may range from stained carpets to a chipped countertop to a poorly painted wall. While the landlords will have to make representations about the conditions of their apartments, offices and retail spaces, we will not be independently verifying those representations. Potential tenants will be viewing the apartments, offices and retail spaces, and we intend to ask them for feedback as to the condition of the apartments, offices and retail spaces. In the event we are alerted to apartments listed on our app which violate any local or state codes or ordinances, or are in any way be uninhabitable or unsafe, we will delete such listings immediately. We intend to feature apartments with cosmetic imperfections only.
Prospective tenants will have to agree to accept such apartments, office or retail space in “as is” condition in exchange for a lower rent. We expect that savings can be anywhere from 5-25% depending on location, the current state of the rental market, and the unit’s imperfection. According to our business plan we will charge the landlord a fee to advertise on our site, and a success fee upon a signed lease.
We believe that our app will benefit both landlords and tenants in that it will allow landlords to rent space they might not have otherwise been able to rent and/or rent space without spending money to fix it up, while at the same time giving potential tenants access to certain real estate markets they might have otherwise been priced out of.
On December 17, 2019, the Company formed Inface Digital Media, Inc. a New York corporation (“Inface Digital Media”). Inface Digital Media has 200 shares of no par value common stock authorized, issued and outstanding with all 200 shares owned by the Company. Inface Digital Media provides digital signage screens to salons in the NY Metro area, which are set up and installed by Hudson Foundry, a company owned by Zev Eisenberg, the son of Samuel Eisenberg, our Chief Executive Officer and Chief Financial Officer. These screens will be programed to play content provided from a licensed content provider, in addition to advertisements provided by the particular salon, and other ads provided by third party vendors who would pay us to show these ads.
Basis of Presentation
The following condensed consolidated balance sheet as of September 30, 2019, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements included within the Company’s Annual Report on Form 10-K for the year ended September 30, 2019, as filed with the SEC on December 30, 2019.
In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurringnature.The results of operations for the three months ended December 31, 2019 may not be indicative of results for the full year.
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Principles of Consolidation
The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its wholly-owned subsidiary, Inface Digital Media, Inc., in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
Generally accepted accounting principles require that the financial statements include estimates by management in the valuation of certain assets and liabilities. Management uses its historical records and knowledge of its business in making these estimates. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made. Accordingly, actual results of operations could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of twelve months or less to be cash equivalents.
The Company’s cash is held with financial institutions, and the account balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit at times. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions.
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Capitalized Software
Costs related to website and internal-use software development are accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 350-50 — Intangibles — Website Development Costs. Such software is primarily related to our website. We begin to capitalize our costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, it is probable that the project will be completed, and the software will be used as intended. Costs incurred prior to meeting these criteria are expensed as incurred and recorded within General and administrative expenses within the accompanying statements of operations. Costs incurred for enhancements that are expected to result in additional features or functionality are capitalized. Capitalized costs are amortized using the straight-line method over the estimated useful life of the software, which the Company believes will be five years.
Income Taxes
The Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the year ended September 30, 2019. The Company files income tax returns with the Internal Revenue Service (“IRS”) and the state of New York.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which creates ASC 606, “Revenue from Contracts with Customers,” and supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition” and most industry-specific guidance throughout the ASC. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The Company adopted ASC 606 effective October 1, 2018, using modified retrospective basis and there was no cumulative effect to the financial statements.
Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of its past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of the Company’s influence, such as the judgment and actions of third parties.
Revenue is generated when a lead provided to a landlord has resulted in a successful lease. We do not receive payments from the tenants for the services provided. We invoice the landlord for our fees after the qualified lease is executed.
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Revenue for Inface Digital Media is generated by selling adverting space on our digital signage screens. We offer advertising on a screen time basis, which means advertisers pay for the amount of time that their ad is displayed. We recognize revenue when we fulfill our performance obligations. A performance obligation may be satisfied over time or at a point in time depending on the customer agreement.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.
When assets are sold, retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheets and any resulting gain or loss is reflected in the statements of operations and stockholders’ deficit in the period realized.
Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows:
Furniture and equipment | 5 years | |
Digital signage screens | 4 years |
The Company has entered into an agreement with a related party to purchase, set up and install digital signage screens. There is a $350 installation charge per digital signage screen. This charge is capitalized at installation and depreciated over the life of the screen.
Advertising and Promotion
Advertising and promotion costs are expensed as incurred. Advertising and promotion costs recognized in the unaudited condensed statements of operations for the three months ended December 31, 2018 and 2019, were $0 and $302, respectively.
Deferred Financing Costs
Costs incurred with obtaining and executing debt arrangements are capitalized and amortized over the term of the related debt using the effective interest method. The Company recognized amortization expense related to the deferred finance costs totaling $252 and $0 during the three months ended December 31, 2018 and 2019, respectively. In accordance with Accounting Standards Update (“ASU”) No. 2015-03, deferred finance costs, net of accumulated amortization, in the amount of $584 and $0 have been included as a contra to the corresponding note payable in the accompanying balance sheet as of September 30, 2019 and December 31, 2019 (unaudited), respectively.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, amended and codified as Topic 842, Leases. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Either a prospective approved or a modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company adopted this provision on October 1, 2018 which did not have an impact on the Company’s financial statements.
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Net Loss per Share
Basic net loss per share is calculated by dividing the net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing income for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include stock options and warrants granted, convertible debt, and convertible preferred stock. There were no potentially dilutive securities for the year ended September 30, 2019. For the three months ended December 31, 2018 and 2019 the basic and diluted loss per share was $(0.00) and $(0.01), respectively.
2. CONCENTRATIONS
Cash Concentration
The Company maintains its cash and cash equivalents at a financial institution which may, at times, exceed federally insured limits. At September 30, 2019 and December 31, 2019 (unaudited), the Company had no uninsured balances and has not experienced any losses in such accounts.
3. CAPITALIZED SOFTWARE
Capitalized software consists of the following as of September 30, 2019 and December 31, 2019:
September 30, 2019 | December 31, 2019 | |||||||
Software | $ | 218,061 | $ | 218,061 | ||||
Less: Accumulated amortization | - | (3,585 | ) | |||||
Total | $ | 218,061 | $ | 214,476 |
The Company started amortizing the software when the software became commercially viable. For the three months ended December 31, 2019, amortization expense was $3,585.
4. PROPERTY AND EQUIPMENT
Property and equipment, net consists of the following:
September 30, 2019 | December 31, 2019 | |||||||
Furniture and equipment | $ | 4,202 | $ | 4,202 | ||||
Digital signage screens | 214,048 | 275,108 | ||||||
Less: Accumulated depreciation | (3,291 | ) | (18,182 | ) | ||||
Total | $ | 214,959 | $ | 261,128 |
For the three months ended December 31, 2018 and 2019, depreciation expense was $0 and $14,891, respectively.
5. NOTES PAYABLE – RELATED PARTIES
During the period from August 10, 2018 (inception) to December 31, 2019, the Company received $606,000 in notes payable from their officers to pay for operating expenses. The notes have an interest rate of 2% annually. The principal and accrued interest amounts are due on February 28, 2022.
The total accrued interest at September 30, 2019 and December 31, 2019 was $5,191 and $8,120, respectively.
The Company recorded a total debt discount of $1,000, related to the note payable in 2018. During the three months ended December 31, 2018 and 2019, the Company recorded amortization expense in the amount of $252 and $0, respectively, related to the amortization of debt discount. The debt discount related to the note payable was fully amortized as of December 31, 2019.
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6. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time the Company may be involved in certain legal actions and claims arising in the ordinary course of business. The Company was not a party to any specific legal actions or claims at September 30, 2019 and December 31, 2019.
Occupancy Leases
The Company leases office space on a month-to-month basis. The monthly rent payment is $149.
Contracts
The Company has entered into an agreement with a related party to design and develop their App software. As of September 30, 2019, and December 31, 2019, the total capitalized cost incurred for this project was $218,061.
The Company has entered into an agreement with a related party to update and maintain the Company’s website. The monthly maintenance cost was originally $6,000 and was amended in July 2019 to $2,000.
The Company has entered into an agreement with a related party to purchase, set up and install digital signage screens.
7. STOCKHOLDERS’ DEFICIT
Common Stock
At inception, the Company issued 10,000,000 shares of common stock to its founders.
As of September 30, 2019, and December 31, 2019, there were 10,000,000 shares of common stock issued and outstanding.
As part of their legal agreement, the Company will issue their attorney 15,000 shares of common stock at par value.
8. RELATED PARTY TRANSACTIONS
The Company has entered into an agreement with a related party to design and develop their App software. As of September 30, 2019, and December 31, 2019, the total capitalized cost incurred for this project was $218,061.
The Company has entered into an agreement with a related party to update and maintain the Company’s website. The monthly maintenance cost was originally $6,000 and was amended in July 2019 to $2,000. For the three months ended December 31, 2019, the total amount expensed was $6,000.
The Company has entered into an agreement with a related party to purchase, set up and install digital signage screens. For the three months ended December 31, 2019 the total amount capitalized was $57,900.
9. BUSINESS SEGMENT INFORMATION
The Company conducts business as two operating segments, Oxford Northeast and Inface Digital Media. The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker.
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Operating results for the business segments of the Company are as follows:
(unaudited, in thousands) | Oxford Northeast | Inface Digital Media | Total | |||||||||
Three Months Ended December 31, 2019 | ||||||||||||
Revenues | $ | — | $ | — | $ | — | ||||||
Loss from operations | (43,452 | ) | (15,600 | ) | (59,052 | ) |
Net long-lived assets and total assets for the business segments of the Company, were as follows:
(unaudited, in thousands) | Oxford Northeast | Inface Digital Media | Total | |||||||||
December 31, 2019 | ||||||||||||
Long-lived assets, net | $ | 215,174 | $ | 260,430 | $ | 475,604 | ||||||
Total assets | 242,131 | 266,530 | 508,661 |
10. INCOME TAXES
The Company files corporate income tax returns in the United States (federal) and New York. The Company is subject to federal, state and local income tax examinations by tax authorities through inception.
As of September 30, 2019 and December 31, 2019, the Company had federal and state net operating loss carry forwards of approximately $362,000 and $471,000 (unaudited), respectively, that may be offset against future taxable income at up to 80% of the taxable income each year. The net operating loss carryforwards do not expire. The Company also had net operating loss carryforwards for the state of New York of approximately $147,000 and $199,000 as of September 30, 2019 and December 31, 2019, respectively, of which approximately $7,000 will begin to expire in 2038.
There was no provision for, or benefit from, income tax during the year ended September 30, 2019 and three months ended December 31, 2019 (unaudited). The tax effects of temporary differences which give rise to deferred tax assets (liabilities) are summarized as follows:
For the Year Ended September 30, | For the Three Months Ended December 31, | |||||||
2019 | 2019 | |||||||
Net operating loss carry forwards | $ | 84,226 | $ | 109,959 | ||||
Fixed Assets | (45,141 | ) | (54,837 | ) | ||||
Total Deferred tax assets | 39,085 | 55,122 | ||||||
Valuation allowance | (39,085 | ) | (55,122 | ) | ||||
Net deferred tax asset | $ | - | $ | - |
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
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All tax years remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.
Reconciliation of the statutory federal income tax to the Company's effective tax:
For the year ended | For the three months ended | |||||||
September 30, | December 31, | |||||||
2019 | 2019 | |||||||
% | % | |||||||
Statutory federal tax rate | 21.00 | % | 21.00 | % | ||||
State taxes, net of federal benefit | 5.61 | % | 4.66 | % | ||||
Valuation allowance | -26.61 | % | -25.66 | % | ||||
Provision for income taxes | 0.00 | % | 0.00 | % |
11. SUBSEQUENT EVENTS
On January 27, 2020, the Company received $5,000 in notes payable from their officer to pay for operating expenses. The note has an interest rate of 2% annually. The principal and accrued interest amounts are due on February 28, 2022.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
As used in this Form 10-Q, references to "Oxford Northeast," the "Company," "we," "our" or "us" refer to Oxford Northeast, LTD. unless the context otherwise indicates.
Forward-Looking Statements
The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the "Report"). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
For a description of these risks and uncertainties, refer to our Annual Report on Form 10-K for the year ended September 30, 2019, as filed with the SEC on December 30, 2019. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
History
We are a New York corporation incorporated on August 10, 2018. We have created and developed Zero Vacancy, which is a software application or app designed to allow us to introduce landlords willing to rent properties at a discounted rate and individuals looking to rent residential or commercial properties. This technology is complete and is fully operational.
On February 15, 2019, we filed a registration statement on Form S-1, which registration statement was declared effective the SEC on July 1, 2019. Pursuant to this registration statement, we are offering up to 1,200,000 shares of our common stock at $1.50 per share, for a maximum offering of $1,800,000. As of the date hereof, we have not sold any shares.
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On December 17, 2019, the Company formed Inface Digital Media, Inc. a New York corporation (“Inface Digital Media”). Inface Digital Media has 200 shares of no par value common stock authorized, issued and outstanding with all 200 shares owned by the Company. Inface Digital Media provides digital signage screens to salons in the NY Metro area, which are set up and installed by Hudson Foundry, a company owned by Zev Eisenberg, the son of Samuel Eisenberg, our Chief Executive Officer and Chief Financial Officer. These screens will be programed to play content provided from a licensed content provider, in addition to advertisements provided by the particular salon, and other ads provided by third party vendors who would pay us to show these ads.
Our principal offices are currently located at 400 Rella Drive #165, Suffern, New York 10901. Our telephone number is 888-813-7289.
Plan of Operation
General
We are currently engaged in an offering to raise up to $1,800,000 by selling up to 1,200,000 shares of our common stock for $1.50 per share. To date, we have not raised any funds in this offering.
Our goal is to market and advertise the Zero Vacancy app. This app is designed to help landlords rent vacant apartments, offices and retail spaces at discounted rates. We intend to enter into agreements with landlords who have vacancies and who agree to accept lower rent payments for imperfect apartments. These imperfections may range from stained carpets to a chipped countertop to a poorly painted wall. While the landlords will have to make representations about the conditions of their apartments, we will not be independently verifying those representations. Potential tenants will be viewing the apartments, and we intend to ask them for feedback as to the condition of the apartments. In the event we are alerted to apartments listed on our app which violate any local or state codes or ordinances, or are in any way be uninhabitable or unsafe, we will delete such listings immediately. We intend to feature units with cosmetic imperfections only.
Prospective tenants will have to agree to accept such apartments, office or retail space in “as is” condition in exchange for a lower rent. We expect that savings can be anywhere from 5-25% depending on location, the current state of the rental market, and the unit’s imperfection. According to our business plan, we will charge the landlord a fee to advertise on our site, and a success fee upon a signed lease.
We believe that our app will benefit both landlords and tenants in that it will allow landlords to rent space they might not have otherwise been able to rent and/or rent space without spending money to fix it up, while at the same time giving potential tenants access to certain real estate markets they might have otherwise been priced out of.
We intend to initially focus on areas of the United States with large rental vacancies on the East Coast – from New York to Florida, and to begin with residential properties in these areas. In Phase II of our business plan, we intend to focus on smaller cities in the Mid-West.
The Zero Vacancy app will be free to download. We hope to have it featured on the app store on iPhones, Androids and other devices.
Our goal is to enter into agreements with landlords in fifteen different cities by the end of June 2020. We will be seeking out landlords with a minimum of 50-100 apartments being rented. We are dividing this into three separate milestones of landlords in five cities each. We intend to engage in marketing and advertising campaigns in these cities. We expect that most of our marketing and advertising efforts will be online. Once our app is functional and it is online, we will begin seeking out landlords to partner with. We hope to achieve our first milestone by the end of March 2020, with the second to follow in May, and the final milestone to be concluded by June 30, 2020. We anticipate that our second and third milestones will be easier to achieve as, at that point, we will have a track record for potential landlord-participants to see. In the event we are not successful in raising funds through our offering, the Company’s president and CFO have agreed to fund the Company through January 2021 to enable us to continue marketing and advertising our app and working toward our milestones.
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For our wholly-owned subsidiary, Inface Digital Media, we are currently seeking to contract with companies looking to advertise on our screens placed in beauty salons in the NYC Metro Area. We intend to charge such companies a fee for the placement of their ads. Simultaneously, we are attempting to enter into agreements with various beauty salons in the NYC Metro Area pursuant to which we would provide the screens free of charge and allow them to place their own dynamic ads in exchange for placement of the screens where they will be visible to patrons and permission to run our own programming and ads on the screens, as well.
We expect this line of business to start generating revenue by the end of June 2020.
Results of Operations
The following discussion should be read in conjunction with the condensed financial statements and in conjunction with the Company’s annual consolidated financial statements included within the Company’s Annual Report on Form 10-K for the year ended September 30, 2019, as filed with the SEC on December 30, 2019. The results of operations for interim periods may not be indicative of results for the full year.
For the three months ended December 31, 2019 and 2018
The Company did not generate revenue during the three months ended December 31, 2019 and 2018. Total operating costs and expenses during the three months ended December 31, 2019 was $59,052 and a net loss of $(62,499) as compared to operating costs and expenses of $14,003 and a net loss of $(14,634) for the three months ended December 31, 2018. Operating expenses consisted of professional, legal and accounting fees relating to our reporting requirements, general and administrative expenses and depreciation and amortization expense.
Liquidity and Capital Resources
Our balance sheet as of December 31, 2019 reflects that the Company had $26,957 in cash. In addition, the Company had a working capital deficiency and stockholders' deficiency of $(69,450) and $(207,966), respectively, at December 31, 2019 and working capital deficiency and stockholders' deficiency of $(13,487) and $(145,467), respectively, at September 30, 2019.
During the period from August 10, 2018 (inception) to December 31, 2019, the Company received $606,000 in notes payable from their officers to pay for operating expenses. The notes have an interest rate of 2% annually. The principal and accrued interest amounts are due February 28, 2022. The total accrued interest at September 30, 2019 and December 31, 2019 (unaudited) was $5,191 and $8,120, respectively.
On June 17, 2019, we filed a registration statement on Form S-1 with the Securities and Exchange Commission. Pursuant to this registration statement, we are offering a maximum of 1.2 million shares of our common stock at $1.50 per share for a total offering of up to $1,800,000. We have not yet raised any funds in this offering.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
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Item 4(T). Controls and Procedures.
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and principal financial and accounting officer have reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) as of December 31, 2019 and have concluded that the disclosure controls and procedures are effective as of such date to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner.
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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OTHER INFORMATION
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company's property is not the subject of any pending legal proceedings.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
None.
Purchases of equity securities by the issuer and affiliated purchasers
None.
Use of Proceeds
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
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101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
OXFORD NORTHEAST, INC. | ||
Dated: February 14, 2020 | By: | /s/ Samuel Eisenberg |
Name: | Samuel Eisenberg | |
Title: | Chief Executive Officer, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Dated: February 14, 2020 | By: | /s/ Abraham Miller |
Name: | Abraham Miller | |
Title: | President and Chairman of the Board (Principal Executive Officer) |
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