10-Q 1 rbo_10q.htm QUARTERLY REPORT Blueprint
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
ACT OF 1934
 
 
 
For the nine months ended September 30, 2016.
                                    OR
 
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from                  to                      .
 
Commission file number: 333-209836
 
 
Results-Based Outsourcing Inc.
 (Exact name of registrant in its charter)
 
Delaware
 
32-0416399
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
WeWork Commons, South Station, 745 Atlantic Ave
Boston MA
 
02111
(Address of principal executive offices)
 
(Zip Code)
 
Issuer’s telephone number: 203.635.7600
 
Securities registered under Section 12(b) of the Exchange Act: None
 
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $0.001 
Indicate by check mark whether the registrant (1) has filed all reports required 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 day. [X] Yes [   ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
 
Yes [ ]     No [  ]
(Does not currently apply to the Registrant)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 if the Exchange Act.
Large accelerated filter                                                                                                                      
Accelerated filter
Non-accelerated filter                                                       
(Do not check if a smaller reporting company)Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
 
Class
 
Outstanding November 14, 2016
Common Stock, $0.0001 par value per share
 
                              4,107,000 shares
 

 
 
 
  TABLE OF CONTENTS
  
PART I
FINANCIAL INFORMATION 
 1
 
 
 
ITEM 1.
INTERIM FINANCIAL STATEMENTS
 1
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 2
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 5
ITEM 4.
CONTROLS AND PROCEDURES
 5
ITEM 5.
OTHER
 5
 
 
 
PART II
 OTHER INFORMATION
 6
 
 
 
ITEM 1.
LEGAL PROCEEDINGS
 6
ITEM 1A.
RISK FACTORS
 6
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 6
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
 6
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 6
ITEM 5
OTHER INFORMATION
 6
ITEM 6
EXHIBITS
 6
  
SIGNATURES
 7
 
 
 
1
 
 
PART I. Financial Information
 
Item 1. Interim Financial Statements.
 
Condensed Balance Sheets as of September 30, 2016 and December 31, 2015
 
 
F-1
 
 
 
 
Condensed Statements of Operations for the three and nine months ended September 30, 2016 and 2015
 
 
F-2
 
 
 
 
Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the nine months ended September 30, 2016
 
 
F-3
 
 
 
 
Condensed Statements of Cash Flows for the nine months ended September 30, 2016 and 2015
 
 
F-4
 
 
 
 
Notes to Condensed Financial Statements
 
 
F-5
 
 
 
 
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS INC) CONDENSED BALANCE SHEETS
AS OF SEPTEMBER 30, 2016 (UNAUDITED) AND DECEMBER 31 2015
 
ASSETS
 
September 30,
2016
 
 
December 31,
2015
 
 
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
   Cash or cash equivalents
  775 
  4,953 
   Accounts receivable
  4,000 
  - 
   Due from shareholder
  - 
  13,000 
   Prepaid expenses
  - 
  5,000 
         TOTAL CURRENT ASSETS
  4,775 
  22,953 
 
    
    
Fixed assets, net
  2,275 
  3,250 
        TOTAL ASSETS
  7,050 
  26,203 
 
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    
    
 
    
    
CURRENT LIABILITIES:
    
    
   Accounts payable and accrued expenses
  15,929 
  11,691 
   Due to shareholder
  9,250 
    
   Accrued taxes
  250 
  250 
        TOTAL CURRENT LIABILITIES
  25,429 
  11,941 
 
    
    
        TOTAL LIABILITIES
  25,429 
  11,941 
 
    
    
STOCKHOLDERS' EQUITY (DEFICIT):
    
    
   Preferred stock, $.0001 par value, 15,000,000 shares authorized,
       none issued and outstanding
  - 
  - 
   Common stock, $.0001 par value, 75,000,000 shares authorized,
    
    
 
 and 4,107,000 and 4,025,000 shares issued and outstanding,
 
    
         as of September 30, 2016 and December 31, 2015, respectively
  411 
  403 
   Additional paid-in capital
  36,730 
  35,098 
   Retained deficit
  (55,520)
  (21,239)
        TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
  (18,379)
  14,262 
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  7,050 
  26,203 
 
The accompanying notes to financial statements are
an integral part of these statements.
 
 
F-1
 
 
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS INC) CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (UNAUDITED)
 
 
 
Three Months Ended Sept 30, 2016
 
 
Three Months Ended Sept 30, 2015
 
 
 Nine Months Ended Sept 30, 2016
 
 
 Nine Months Ended Sept 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Professional service revenues
  22,000 
  21,017 
  152,478 
  104,017 
Client expense reimbursement
  - 
  1,942 
  1,191 
  1,942 
Total Revenues
  22,000 
  22,959 
  153,669 
  105,959 
 
    
    
    
    
Cost of revenues
  - 
  60 
  31,460 
  9,163 
Cost of revenues from a related party
  8,000 
  7,500 
  43,650 
  24,500 
Gross Profit
  14,000 
  15,399 
  78,559 
  72,296 
 
    
    
    
    
Operating expenses:
    
    
    
    
Stock based compensation
  - 
  - 
  1,640 
  - 
Depreciation
  325 
  - 
  975 
  - 
Sales and marketing
  3,900 
  - 
  8,918 
  3,204 
General and administrative
  15,159 
  16,258 
  70,107 
  48,228 
General and administrative costs from a related party
  8,200 
  7,500 
  31,200 
  22,500 
      Total operating expenses
  27,584 
  23,758 
  112,840 
  73,932 
 
    
    
    
    
Net (Loss) from operations
  (13,584)
  (8,359)
  (34,281)
  (1,636)
 
    
    
    
    
Net (Loss) before taxes
  (13,584)
  (8,359)
  (34,281)
  (1,636)
 
    
    
    
    
Income tax provision
  - 
  - 
  - 
  - 
 
    
    
    
    
Net (Loss) applicable to common shareholders
  (13,584)
  (8,359)
  (34,281)
  (1,636)
 
    
    
    
    
    Net (Loss) per share - basic and diluted
 $(0.00)
 $(0.00)
 $(0.01)
 $(0.00)
 
    
    
    
    
 
Weighted number of shares outstanding -
 
    
    
    
    Basic and diluted
  4,107,000 
  4,025,000 
  4,091,385 
  4,025,000 
 
The accompanying notes to financial statements are an integral part of these statements.
 
 
F-2
 
 
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS INC) CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (UNAUDITED)
 
 
 
  Preferred Stock
 
 
  Common 
 
 
Paid-In
 
 
Retained
 
 
Stockholders'
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
(Deficit)
 
 
Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance December 31, 2015
  - 
  - 
  4,025,000 
 $403 
 $35,098 
 $(21,239)
 $14,262 
 
    
    
    
    
    
    
    
Stock based compensation
  - 
  - 
  82,000 
 $8 
 $1,632 
    
 $1,640 
Net loss for period
  - 
  - 
    
    
    
 $(34,281)
 $(34,281)
 
    
    
    
    
    
    
    
Balance Sept 30, 2016
  - 
 $- 
  4,107,000 
 $411 
 $36,730 
 $(55,520)
 $(18,379)
 
The accompanying notes to financial statements are an integral part of these statements.
 
 
F-3
 
 
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS INC) CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2016 AND 2015 (UNAUDITED)
 
 
 
Nine Months Ended Sept 30, 2016
 
 
Nine Months Ended Sept 30, 2015
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net (loss)
 $(34,281)
 $(1,636)
Adjustments to reconcile net (loss) to cash used in operating activities:
    
    
 
    
    
Stock based compensation
  1,640 
  - 
Depreciation
  975 
  - 
 
    
    
Change in operating assets and liabilities:
    
    
Accounts receivable
  (4,000)
  (1,200)
Due from shareholder
  13,000 
  5,000 
Due to shareholder
  9,250 
  - 
Prepaid expenses
  5,000 
  - 
Accounts payable and accrued expenses
  4,238 
  (8,415)
Net cash (used in) operating activities
  (4,178)
  (6,251)
 
    
    
 
    
    
NET DECREASE IN CASH
  (4,178)
  (6,251)
 
    
    
CASH AND CASH EQUIVALENTS at beginning of period
  4,953 
  13,372 
CASH AND CASH EQUIVALENTS at end of period
  775 
  7,121 
 
    
    
Supplemental disclosure of cash flow information
    
    
   Cash paid for:
    
    
       Interest
 $- 
 $- 
       Income Taxes
 $- 
 $- 
 
The accompanying notes to financial statements are an integral part of these statements.
 
 
F-4
 
 
RESULTS-BASED OUTSOURCING INC (FORMERLY DIGITAL COMMERCE SOLUTIONS INC) NOTES TO FINANCIAL STATEMENTS
 
Note 1.  The Company History and Nature of the Business 
 
Results-Based Outsourcing Inc. (formerly Digital Commerce Solutions Inc.) (the “Company”), formed on July 22, 2013.   The Company is a consulting company for the small business enterprise market (here-in-under, referred to as the “SME Market”).   In general, SME Market companies range from sole proprietors – the one-person band running his or her business with no employees – through to those that have up to 50 employees.    The Company targets those SME companies with limited resources and/or infrastructure looking to outsource their operations and/or corporate-level functions (“Business Services”).  Such Business Services might include, financial reporting, accounting, sales and marketing, compliance, legal, human resource management or investor relations.
 
The Company also looks to help clients identify, implement and maintain third-party Software-as-a- Service (“SAAS”) products that help streamline business operations through automation.
 
The financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business.   Since inception, the Company has a retained deficit of $55,520 at September 30, 2016.   We have a limited operating history and our growth is dependent upon maintaining our client base, achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations and pay liabilities arising from normal business operations when they come due, and upon profitable operations. 
 
We may need to either borrow funds from our majority shareholder or raise additional capital through equity or debt financings. We expect our current majority shareholder will be willing and able to provide such additional capital.   However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us.   Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business.   If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
 
Note 2.  Summary of Significant Accounting Policies
 
Basis of Presentation and Organization
 
The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting. The balance sheet at December 31, 2015 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United Sates of America. The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for the fair presentation of the results for the periods covered. These financial statements should be read in conjunction with the financial statements and additional information as contained in our Form S-1A for the year ended December 31, 2015.
 
Cash and Cash Equivalents  
 
For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. The Company’s cash and cash equivalents are located in a United States bank. As of September 30, 2016 there were no cash equivalents.
 
Fixed Assets
 
Office equipment is stated at cost and depreciated over three years using the straight line method of accounting.   For the nine months ended September 30, 2016 and 2015, the company recorded depreciation of $975 and of $0, respectively.
 
 
F-5
 
 
Revenue Recognition
 
The Company derives its revenue from the sale of business outsourcing consulting, recruiting and staff placement services.   The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
 
Consulting Services
 
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition. The Company recognizes revenue when all of the following conditions are met:
 
there is persuasive evidence of an arrangement;
the service has been provided to the customer;
the collection of the fees is reasonably assured; and
the amount of fees to be paid by the customer is fixed or determinable.
 
The Company records revenue as services are performed.   Invoicing is done at the beginning of each month for the services to be rendered that month.
 
Reimbursements
 
The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue in its Statement of Operations.
 
Income (Loss) per Common Share
 
Basic income(loss) per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted income (loss) per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  There were no dilutive financial instruments issued or outstanding for the period ended September 30, 2016.
 
Income Taxes
 
The Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
 
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws.  Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
 
Fair Value of Financial Instruments
 
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2016 the carrying value of accounts receivable, accounts payable and accrued expenses approximated fair value due to the short-term nature and maturity of these instruments.
 
 
F-6
 
 
Estimates
 
The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of September 30, 2016 and cumulative expenses from inception. Actual results could differ from those estimates made by management.
 
Customer Concentration
 
For the nine months ended September 30, 2016, 3 customers made up 71% of our gross revenue, including 51%, 10% and 10% and we had revenue from a total of 11 customers.    During the nine months ended September 30, 2015, 3 customers made up 90% of our revenue, including 42%, 24% and 24%. As of September 30, 2016, 2 customers made up 100% of our accounts receivable, including, 50% and 50%.
 
Stock-Based Compensation
 
Stock compensation arrangements with non-employee service providers are accounted for in accordance ASC 505-50 Equity-Based Payments to Non-Employees, using a fair value approach. For the nine months ended September 30, 2016, we recorded $1,640 in stock based compensation. The Company believes the $0.02 per share value attributed to the stock based compensation is fair as it reflects the same price paid by new shareholders and no significant changes have occurred in the company plan since the last investment. There is no other market for the security.
 
Recent accounting pronouncements
 
In March 2016, the Financial Accounting Standards Board issued Accounting Standards Codification Update No. 2016-09 Compensation – Stock Compensation (Topic 718). The amendments in this update affect all entities that issue share-based payment awards to their employees. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.
 
In May 2014, the Financial Accounting Standard Board Issued Accounting Standards Codification Update Non 2014-09 Revenue from Contracts with Customers (Topic 616). The amendment for a public entity, effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. A public entity is an entity that is any one of the following: (1) a public business entity, (2) a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, (3) an employee benefit plan that files or furnishes financial statements to the SEC.
 
In August 2016, the Financial Accounting Standard Board Issued Accounting Standards Codification Update Non 2016-15 Statement of Cash Flows (Topic 230), Classification of Certain Receipts and Cash Payments. The amendment for a public company for annual reporting periods beginning December 15, 2017, and interim periods within those fiscal years.
 
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
 
 
F-7
 
 
3. Common Stock
 
On February 16, 2016, the Board of Directors approved an agreement with legal counsel for the Company which included; the issuance of 82,000 shares of common stock and the total payment of $15,000 to counsel for services related to the Company’s Form S-1 Registration Statement.
 
4. Income Taxes  
 
The provision for income taxes for the nine months ended September 30, 2016 and 2015 was as follows (assuming a 15% effective tax rate):
 
 
 
Nine months ended September 30, 2016
 
 
Nine Months ended September 30, 2015
 
 
 
 
 
 
 
 
Current Tax Provision:
 
 
 
 
 
 
   Federal-State-Local
 $- 
 $- 
 
    
    
Total current tax provision
 $- 
 $- 
 
    
    
Deferred Tax Provision:
    
    
  Loss carry-forwards
  (5,142)
  (245)
  Change in valuation allowance
  5,142 
  245 
 
    
    
Total deferred tax provision
 $- 
 $- 
 
    
    
The Company had deferred income tax asset as of as follows:
 

 
September 30 2016
 
 
December 31, 2015
 
   Loss carry-forwards
 $(8,328)
 $3,186 
   Less - valuation allowance
  8,328 
  (3,186)
 
    
    
Total net deferred tax assets
 $- 
 $- 
 
The Company provided a valuation allowance equal to the deferred income tax assets for period ended September 30, 2016 because it is not presently known whether future taxable income will be sufficient to utilize the loss carry-forwards.
 
As of September 30, 2016, the Company had approximately $55,520 in tax loss carry-forwards that can be utilized in future periods to reduce taxable income, and expire by the year 2036.
 
The Company did not identify any material uncertain tax positions.  The Company did not recognize any interest or penalties for unrecognized tax benefits.
 
The federal income tax returns of the Company are subject to examination by the IRS, generally for the three years after they are filed. The Company's 2013, 2014 and 2015 federal and state tax returns are still open for examination by the taxing authorities.
 
 
F-8
 
 
5. Related Party Loans and Transactions
  
Ocean Cross Business Solutions Group LLC.
 
On August 1, 2013, the Company engaged the services of Ocean Cross Business Solutions Group LLC (“OCBSG Agreement”), to provide client delivery services, finance and general management services.   Ocean Cross Business Solutions Group LLC is owned by William Schloth, the husband of Mary Ellen Schloth, our sole officer and director. She is also the sole shareholder of MLH, our major shareholder.   The OCBSG Agreement provides for a base monthly consulting fee of $5,000, plus additional payments based upon services rendered during a period.    The Agreement may be terminated by either party at any time.   The Company terminated the OCBSG Agreement as of September 30, 2015 and no money is owed as of September 30, 2016.
 
William Schloth
 
On October 1, 2015 the Company engaged the services of William Schloth (“WS Agreement”) to provide client delivery services, finance and general management services.    Mr. Schloth is the husband of Mary Ellen Schloth, the CEO and majority shareholder of MLH, our majority shareholder.    The WS Agreement provides for a monthly consulting fee of $5,000, plus additional payments based upon services rendered during a period.
 
The Company has reflected the above arrangements in the statements of operation as related party expenses. For the nine months ended September 30, 2016 the Company recorded $74,850.   Of that amount, $43,650 and $31,200, have been allocated to cost of revenue and operating expenses, respectively. For the nine months ended September 30, 2015 the Company recorded $47,000.  Of that amount, $24,500 and $22,500, have been allocated to cost of revenue and operating expenses, respectively. The Company did not owe any money under the WS Agreement as of September 30, 2016.
 
Shareholder Loan
 
For the period ended September 30, 2016 the Company owed Mountain Laurel Holdings Inc. (“MLH”) $9,250. The amount owed does not carry interest and there is no written agreement related to such amount. The amount of $13,000 due from MLH as of December 31, 2015 was repaid.
 
6.   Subsequent Events
 
On November 5, 2016, the Company’s major shareholder loaned the company $5,000.
 
 
F-9
 
 
Item 2.  Management’s Discussion and Analysis or Plan of Operation.
 
FORWARD-LOOKING STATEMENTS
 
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe," “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of this prospectus. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this prospectus, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
 
We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act. We will continue to be an emerging growth company until: (i) the last day of our fiscal year during which we have total annual gross revenues of $1,000,000,000 or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which we are deemed to be a large accelerated filer, as defined in Section 12b-2 of the Exchange Act.
 
As an emerging growth company, we are exempt from:
–    Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;
–    The requirement to provide, in any registration statement, periodic report or other report to be filed with the Securities and Exchange Commission (the “Commission” or “SEC”), certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement;
–    Compliance with new or revised accounting standards until those standards are applicable to private companies;
–    The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 to provide auditor attestation of our internal controls and procedures; and
–    Any Public Company Accounting Oversight Board (“PCAOB”) rules regarding mandatory audit firm rotation or an expanded auditor report, and any other PCAOB rules subsequently adopted unless the Commission determines the new rules are necessary for protecting the public.
 
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Startups Act.
 
We are also a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are not required to provide selected financial data pursuant to Item 301 of Regulation S-K, nor are we required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified executive compensation disclosure under Item 402 of Regulation S-K.
 
Summary of Business
 
We are a consulting company for the small business enterprise market (hereinafter referred to as the “SME Market”).   In general, SME Market companies range from sole proprietors – the one-person operation with no employees to those companies that have up to 50 employees.   We target those SME companies with limited resources and/or infrastructure looking to outsource all or part of their operations and/or corporate level functions.  To get started, we recommend clients start with outsourcing one or more of these areas; financial and management reporting, accounting, tax reporting, legal and compliance, human resource management or sales and marketing (collectively our “Business Services”).  We also look to help clients identify, implement and maintain business software products that are currently available in the marketplace that help streamline business operations through automation (our “Managed Software Services”).    Our Business Services and Managed Software Services are collectively referred to as our Services.
 
Our Services are provided to clients on a project-based fee arrangement or a fixed term agreement with an initial retainer and monthly or periodic payments. Our fixed term agreements generally arise when a client requires a service and does have the internal manpower to fulfill the responsibility.  We deliver our Services through in-house personnel and outside independent contractors which we directly engage to support our clients.  All billing and related contractual agreements are made directly between our clients and our company.
 
 
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Our Strategy  
 
Our strategy for growing our operations includes:
 
Rolling out various outbound sales and marketing campaigns to grow our client base;
 
Expanding our outsourced third party provider base to assist in cost efficiently delivering our services; and
 
Growth through acquisition with complementary service providers and software product companies.
 
Plan of Operations
 
We plan to establish a broad customer base by various traditional and internet marketing campaigns.
 
As of this date, we have taken the following steps to implement our business plan:
 
Development of our business plan
Developed the basic components of our delivery system, including engagement sizing and business-area maturity grading tools;
We have developed and launched our website, www.rboutsourcing.com
We have identified 50 business software-as-a-service tools that should help our clients streamline their operations and corporate functions
 
Over the next twelve months we plan to;
 
continue to standardize the processes of how our consulting services are provided. This is important to allow us to efficiently scale our operations with increased revenue. We are already delivering services, the process has already been designed and now will focus on continuous improvements.
increase efforts to acquire new clients. We plan to do internet marketing that might include, search engine marketing, blogging, social media, affiliated marketing, organic and paid for search engine optimization. We may also employ certain traditional marketing tactics, including, mail, phone calls, content development, industry networking and direct selling. We plan to issue our first Internet marketing campaign in the 1st calendar quarter of 2017. We anticipate this to cost around $10,000;
Our internal performance metric milestone targets include:
 
1.
Target number of customers. By March 31, 2017, we are targeting to engage a minimum of two new customers per month with a cumulative target of 20 customers over the next twelve months.  The targeted customer retention rate for new customers is six months. We intend to reinvest from 25%-50% of our profits back into sales and marketing efforts. We expect our marketing efforts to drive the speed at which our client base grows.
2.
Refine through independent research and feed-back from clients, our database of what we consider best-in-class business software-as-a-service tools.    By March 2017, we intend to have a database of over 100 such products to advise our clients on and help them implement and maintain.
3.
   New employees; Our business model for expansion of direct in-house participants is under an independent contractor/cash or fixed fee basis. If an independent contractor is utilized on a particular engagement, in advance of commencing such work and agreed upon price is established based upon the scope of work. Furthermore, these independent contractors general work remotely. As such, this keeps our fixed overhead very low and motivates our people to drive more revenue
 
 
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Results of Operations
 
Summary of Key Results
 
For the unaudited three month periods ending September 30, 2016 and 2015
 
Revenue and Cost of Revenues
 
Total revenue for the three months ended September 30, 2016, and 2015 was $22,000, and $22.959, respectively.
 
Cost of revenues for the three months ended September 30, 2016 and 2015 were $8,000 and $7,560, respectively. Such amounts included $8,000 and $7,500 paid to a related party, respectively.
 
Operating Expenses
 
Total operating and administrative expenses for the three months ended September 30, 2016 and 2015 were $27,584 and $23,758, respectively. That amount included depreciation of $325 and $0, respectively. The remaining amount primarily consists of professional services and reporting expenses. The Company recorded general and administrative costs of related party of $8,200 and $7,500, for the three months ended September 30, 2016 and 2015, respectively.
 
For the unaudited nine month periods ending September 30, 2016 and 2015
 
Revenue and Cost of Revenues
 
Total revenue for the nine months ended September 30, 2016, and 2015 was $153,669, and $105,959, respectively. The increase was due to the addition of 7 new clients.
 
Cost of revenues for the nine months ended September 30, 2016 and 2015 were $75,110 and $33,663, respectively. Such costs include $31,460 and $9,163 paid to independent contractors, and, $43,650 and $24,500 paid to a related party, respectively.
 
Operating Expenses
 
Total operating and administrative expenses for the nine months ended September 30, 2016 and 2015 were $112,840 and $73,932, respectively. That amount included stock based compensation and depreciation of $1,640 and $0, and $975 and $0, respectively. The remaining amount primarily consists of professional services and reporting expenses. The Company recorded general and administrative costs of related party of $31,200 and $22,500, for the nine months ended September 30, 2016 and 2015, respectively.
 
Liquidity and Capital Resources
 
At September 30, 2016, we had cash of $775 and a working capital deficit of $20,654.   Since inception, we have raised $35,098 in equity capital.   We had a total stockholders’ deficit of $18,379 and an accumulated deficit of $55,520 as of September 30, 2016.
 
We used $4,178 and $6,251 in operating activities for the nine months ended September 30, 2016 and 2015, respectively.    These include net loss of $34,281 and $1,636, respectively.    Cash flows provided by (used in) operating activities included changes in operating assets and liabilities totaling $27,488 and ($4,615) for the nine months ended September 30, 2016 and 2015, respectively.
 
Our future growth in dependent upon achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations, and upon profitable operations.
 
 
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As of September 30, 2016, our cash balance was $775.   We believe we will require a minimum of $50,000 in additional cash over the next 12 months to maintain our regulatory reporting and filings and cover our operations costs. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, our major shareholder, Mountain Laurel Holdings Inc. has indicated that they may be willing to provide funds required to maintain the reporting status in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company.   However, there is no contract in place or written agreement securing this agreement. Management believes if the Company cannot maintain its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.
  
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis.
 
With respect to shares issued for services, our board of directors determines the value of the services provided and authorizes the issuance of shares based upon the fair market value of our shares.
  
Off-Balance Sheet Arrangements
 
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts. 
 
Critical Accounting Policies
 
Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts, inventory reserves and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.
 
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
 
Revenue Recognition
 
The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
 
 
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Consulting Services
 
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition. The Company recognizes revenue when all of the following conditions are met:
 
there is persuasive evidence of an arrangement;
the service has been provided to the customer;
the collection of the fees is reasonably assured; and
the amount of fees to be paid by the customer is fixed or determinable.
 
The Company recognizes revenue as services are performed
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K
 
Item 4. Controls and Procedures
 
Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company.
 
(a) Evaluation of Disclosure Controls and Procedures
 
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SECs”) rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
 
(b) Changes in the Company’s Internal Controls Over Financial Reporting
 
Other than described above, there have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.  
 
Item 5. Other
 
None
 
 
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Part II- Other Information
 
Item 1. Legal Proceedings
 
We are not a party to any legal proceedings. Management is not aware of any legal proceedings proposed to be initiated against us. However, from time to time, we may become subject to claims and litigation generally associated with any business venture operating in the ordinary course.
 
Item 1A. Risk Factors
 
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K
 
Item 3. Recent Sale of Unregistered Securities
 
None.
 
Item 2. Exhibits
 Exhibit
Number
 
Description
 
 
 
31.1*
 
Rule 13a-14(a) Certification of the Chief Executive and Financial Officer
32.1*
 
Section 1350 Certification of Chief Executive and Financial Officer
 
 
* F
 
* Filed along with this document
 
    
 
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SIGNATURES
 
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Results-Based Outsourcing Inc
 
 
Dated: November 14, 2016
By:
/s/ Mary Ellen Schloth
 
 
Mary Ellen Schloth
 
 
Chief Executive Officer, Chief Accounting Officer & Chairman
 
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
 
Signature
Title
Date
/s/ Mary Ellen Schloth
Mary Ellen Schloth
Chief Executive Officer, Chief Accounting Officer & Chairman
November 14, 2016
 
 
 
 
 
 
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