10-Q 1 rbo_10q.htm QUARTERLY REPORT Blueprint
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the three months ended March 31, 2017.
                                    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.)
 
2490 Blackrock Turnpike 344, Fairfield CT
 
06824
(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 $0.0001 
 
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. ☒ 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, 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 if the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
☐  (Do not check if a smaller reporting company)
Smaller reporting company
☒ 
 
 
Emerging growth company
 
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 12 (a) or the Exchange Act ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
 
Class
 
Outstanding May 15, 2017
Common Stock, $0.0001 par value per share
 
 4,107,000 shares
 

 
 
 
  TABLE OF CONTENTS
  
PART I
FINANCIAL INFORMATION 
 2
 
 
 
ITEM 1.
INTERIM FINANCIAL STATEMENTS
 2
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 3
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 7
ITEM 4.
CONTROLS AND PROCEDURES
 7
ITEM 5.
OTHER
 8
 
 
 
PART II
 OTHER INFORMATION
 8
 
 
 
ITEM 1.
LEGAL PROCEEDINGS
 8
ITEM 1A.
RISK FACTORS
 8
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 8
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
 8
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
ITEM 5
OTHER INFORMATION
 
ITEM 6
EXHIBITS
 
  
SIGNATURES
 9
 
 
 
1
 
 
PART I. Financial Information
 
Item 1. Interim Financial Statements.
 
Condensed Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016
 
 
F-1
 
 
 
 
 
 
Condensed Statements of Operations for the three months ended March 31, 2017 and 2016
 
 
F-2
 
 
 
 
 
 
Condensed Statements of Changes in Stockholders’ (Deficit) for the three months ended March 31, 2017
 
 
F-3
 
 
 
 
 
 
Condensed Statements of Cash Flow for the three months ended March 31, 2017 and 2016
 
 
F-4
 
 
 
 
 
 
Notes to Condensed Financial Statements
 
 
F-5
 
 
 
 
 
 
 
2
 
 
RESULTS-BASED OUTSOURCING INC
CONDENSED BALANCE SHEETS
AS OF MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016
  
ASSETS
 
March 31, 2017
 
 
December 31, 2016
 
 
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
   Cash or cash equivalents
 $18,385 
 $11,354 
  Accounts receivable, net
  19,500 
  10,500 
         TOTAL CURRENT ASSETS
  37,885 
  21,854 
 
    
    
Fixed assets, net
  1,625 
  1,950 
        TOTAL ASSETS
 $39,510 
 $23,804 
 
    
    
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
    
    
 
    
    
CURRENT LIABILITIES:
    
    
   Accounts payable and accrued expenses
 $12,875 
 $16,401 
   Accrued taxes
  250 
  250 
   Accrued interest
  189 
  - 
   Due to shareholder
  34,750 
  26,250 
   Note payable
  25,000 
  - 
        TOTAL CURRENT LIABILITIES
  73,064 
  42,901 
 
    
    
        TOTAL LIABILITIES
  73,064 
  42,901 
 
    
    
STOCKHOLDERS' (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 issued and outstanding,
    
    
    as of March 31, 2017 and December 31, 2016
  411 
  411 
   Additional paid-in capital
  36,730 
  36,730 
   Retained deficit
  (70,695)
  (56,238)
        TOTAL STOCKHOLDERS' (DEFICIT)
  (33,554)
  (19,097)
        TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
 $39,510 
 $23,804 
 
The accompanying notes to financial statements are
an integral part of these statements.
 
 
F-1
 
 
RESULTS-BASED OUTSOURCING INC
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
 
 
 
Three Months Ended
March 31, 2017
 
 
Three Months Ended
March 31, 2016
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
Professional service revenues
 $12,500 
 $103,478 
Client expense reimbursement
  - 
  413 
Total Revenues
  12,500 
  103,891 
 
    
    
Cost of revenues
  - 
  18,960 
Cost of revenues from a related party
  4,750 
  30,150 
Gross Profit
  7,750 
  54,781 
 
    
    
Operating expenses:
    
    
Marketing and sales
  282 
  287 
Stock based compensation
  - 
  1,640 
General and administrative
  18,736 
  34,523 
General and administrative costs from a related party
  3,000 
  17,500 
      Total operating expenses
  22,018 
  53,950 
 
    
    
Net Income (Loss) from operations
  (14,268)
  831 
 
    
    
Other expenses
    
    
  Interest expense
  189 
  - 
      Total other expenses
  189 
  - 
 
    
    
Net Income (Loss) before taxes
  (14,457)
  831 
 
    
    
Net Income (loss) applicable to common shareholders
 $(14,457)
 $831 
 
    
    
    Net income( loss) per share - basic and diluted
 $(0.00)
 $0.00 
 
    
    
 
Weighted number of shares outstanding -
 
    
    Basic and diluted
  4,107,000 
  4,065,089 
 
The accompanying notes to financial statements are an integral part of these statements.
 
 
F-2
 
 
RESULTS-BASED OUTSOURCING INC
CONDENSED STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2017
 
 
 
  Preferred Stock      
 
 
  Common      
 
 
Paid-In
 
 
Retained
 
 
Stockholders'
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
(Deficit)
 
 
 (Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance December 31, 2016
  - 
 $- 
  4,107,000 
 $411 
 $36,730 
 $(56,238)
 $(19,097)
 
    
    
    
    
    
    
    
Net loss for period
  - 
  - 
    
    
    
  (14,457)
  (14,457)
 
    
    
    
    
    
    
    
Balance March 31, 2017
  - 
 $- 
  4,107,000 
 $411 
 $36,730 
 $(70,695)
 $(33,554)
 
The accompanying notes to financial statements are an integral part of these statements.
 
 
F-3
 
 
RESULTS-BASED OUTSOURCING INC
CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 
 
 
 
Three Months Ended
March 31, 2017
 
 
Three Months Ended
March 31, 2016
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income (loss)
 $(14,457)
 $831 
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
    
    
 
    
    
Stock based compensation
  - 
  1,640 
Depreciation
  325 
  325 
 
    
    
Change in operating assets and liabilities:
    
    
Accounts receivable
  (9,000)
  (20,413)
Due to shareholder
  8,500 
  - 
Prepaid expenses
  - 
  5,000 
Accounts payable and accrued expenses
  (3,526)
  8,708 
Accrued interest expense
  189 
  - 
Net cash used in operating activities
 $(17,969)
 $(3,909)
 
    
    
CASH FLOW FROM FINANCING ACTIVITIES:
    
    
Proceeds from note issuance
  25,000 
  - 
Net cash provided by financing activities
 $25,000 
 $- 
 
    
    
NET INCREASE (DECREASE) IN CASH
  7,031 
  (3,909)
 
    
    
CASH AND CASH EQUIVALENTS at beginning of year
  11,354 
  4,953 
CASH AND CASH EQUIVALENTS at end of year
 $18,385 
 $1,044 
 
    
    
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
NOTES TO INTERIM CONDENSED 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, is engaged in providing a variety of out-sourced business services which include; accounting and bookkeeping, marketing, document storage, staffing, recruiting and personal executive organization (collectively, the “Services”). The Services are grouped into two offerings; (i) Business Process Outsourcing (“BPO”), and (ii) Software Managed Outsourcing (“SMO”). BPO services brings people and process to a client’s business that can ranged from providing a entire back office to individual projects. SMO services bring software tools to a client’s business to help them run more efficiently and effectively.
 
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 $70,695 and had a working capital deficit of $35,179 at March 31, 2017. Our growth is dependent upon 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. 
 
Management has concluded that due to the conditions described above, there is substantial doubt about the entity’s ability to continue as a going concern through May 15, 2018. We have evaluated the significance of these conditions in relation to our ability to meet our obligations and believe that 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
 
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. The Company does not have any cash equivalents as of March 31, 2017 or December 31, 2016.
 
Accounts Receivable
 
The Company’s accounts receivable are derived from direct customers. Collateral is not required for accounts receivable. The Company maintains an allowance for potential credit losses as considered necessary. The Company performs ongoing reviews of all customers that have breached their payment terms or for whom information has become available indicating a risk of non-recoverability. The Company records an allowance for bad debts for specific customers identified as well as an allowance based on its historical collection experience. The Company’s evaluation of the allowance for potential credit losses requires the use of estimates and the actual results may differ from these estimates. At March 31, 2017 and and December 31, 2016, the allowance for potential credit losses was $0
  
Fixed Assets
 
Office equipment is stated at cost and depreciated over three years using the straight line method of accounting. For the three months ending March 31, 2017, and 2016, the Company recorded depreciation expense of $325 and $325, respectively.
 
 
F-5
 
 
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.
 
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 or monthly based upon contract terms. Contracts may either be for a specific project, or, a monthly recurring fee.
 
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.
 
Net Income (Loss) per Common Share
 
Basic income (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted income per share is computed similar to basic income 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 three month periods ended March 31, 2017 or 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 estimates 
 
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 March 31, 2017 the carrying value of accounts receivable, accounts payable-trade and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.
 
 
F-6
 
 
Customer Concentration Disclosure.
 
For the three months ended March 31, 2017, and 2016, three and five customers make up 100%, and 91%, respectively, of our gross revenue. They represent 27%, 36% and 36% for three months ended March 31, 2017 and 41%, 14%, 14%, 11% and 11% for the three months ended March 31, 2016. Only one customer was present in both periods.
 \
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 three months ended March 31, 2017, and 2016, the Company recorded $0 and $1,640, respectively in stock-based compensation.
 
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 March 31, 2017 and cumulative expenses from inception. Actual results could differ from those estimates made by management.
 
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 FASB issued ASU 2014-09, Revenue from Contracts with Customers which modifies how all entities recognize revenue and various other revenue accounting standards for specialized transactions and industries. This update is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The Company has begun limited evaluation of the possible impact of ASU 2014-15 including obtaining training on ASU-2014-09 and the contract review and does not anticipate that it will have a material impact on the Company's consolidated financial statements. We have a small number of conflicts which require an assessment and believe we have sufficient time for the implementation of ASU-2014-19.
 
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.
 
3. Note Payable
 
On March 8, 2017, the Company executed a promissory note (the “Note”) with an unaffiliated lender in the amount of $25,000. The Note matures one year from issuance and has a 12% interest rate. For the three months ended March 31, 2017, the Company recorded $189 in interest expense
 
4. 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 rendered through the date the Company’s S-1 filing is declared effective. The $15,000 will be paid the sooner of any combination of; (i) the sum of $500 per month commencing on November 1, 2015, (ii) the first use of proceeds from the S-1 offering, or (iii) the change of control of the Company.
 
 
F-7
 
 
5. Income Taxes
 
The provision for income taxes for the three months ended March 31, 2017 and 2016 was as follows (assuming a 15%, and 3% effective tax rate for federal and state taxes, respectively):
 
 
 
Three Months ended
March 31, 2017
 
 
Three Months Ended
March 31, 2016
 
 
 
 
 
 
 
 
Current Tax Provision:
 
 
 
 
 
 
   Federal-State-Local
  - 
 $- 
 
    
    
Total current tax provision
 $- 
 $- 
 
    
    
Deferred Tax Provision:
    
    
  Loss carry-forwards
  (2,602)
  - 
  Change in valuation allowance
  2,602 
  - 
 
    
    
Total deferred tax provision
 $- 
 $- 
 
    
    
 
The Company had deferred income tax asset as of as follows:
 
 
 
 
 
 
 
 
 
March 31, 2017
 
 
December 31, 2016
 
   Loss carry-forwards
 $(12,725)
 $(8,436)
   Less - valuation allowance
  12,725 
  8,436 
 
    
    
Total net deferred tax assets
 $- 
 $- 
 
The Company provided a valuation allowance equal to the deferred income tax assets for period ended March 31, 2017 because it is not presently known whether future taxable income will be sufficient to utilize the loss carry-forwards.
 
As of March 31, 2017, the Company had approximately $72,193 in tax loss carry-forwards that can be utilized future periods to reduce taxable income, and expire by the year 2037.
 
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 tax returns for the year end 2014, 2015 and 2016 are still subject to examination.
 
 
F-8
 
 
6. Related Party Loans and Transactions
 
William Schloth
 
On October 1, 2015 the Company has engaged the services of William Schloth (“WS Agreement”) to provide assistance with filing of the SEC Form S-1, general accounting, finance, general management and client delivery services. Mr. Schloth is the husband our 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. On January 1, 2017 the WS Agreement was revised to include a new minimum monthly payment of $1,000 which will represent a minimum of 10 hours of work per month. Should hours worked exceed the minimum hours, additional payments will be agreed upon amount. The Company did not owe any money under the WS Agreement as of March 31, 2017
 
The Company has reflected the above arrangement in statement of operation as related party expenses. For the three months ended March 31, 2017 and 2016 the Company paid $7,750, and $47,650, respectively. For the three months ended March 31, 2017 and 2016, of that amount, $3,000 and $17,500, and, $4,750 and $30,150 have been allocated to operating expenses and cost of revenue, respectively.
 
Shareholder Loan
 
For the period ended, March 31, 2017 the Company owed MLH $34,750. The loans are non-interest bearing with no agreement in place for repayment.
 
 
F-9
 
 
Item 2.  Management’s Discussion and Analysis or Plan of Operation.
 
FORWARD-LOOKING STATEMENTS
 
Certain matters discussed herein are forward-looking statements.  Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
 
1. 
 
our future operating results;    
2. 
 
our business prospects; 
3. 
 
any contractual arrangements and relationships with third parties; 
4. 
 
the dependence of our future success on the general economy; 
5. 
 
any possible financings; and 
6. 
 
the adequacy of our cash resources and working capital. 
 
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 filing of this Form 10-Q.   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 filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
 
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
 
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.
 
Outsourcing has clearly becoming an integral part of a business strategy to achieve unparalleled performance.  Packaged outsourcing takes it to the next level. Savvy business owners intent on guiding their companies toward optimized performance began by outsourcing a single process.   That is the first step.  Now, leading organizations are seeing the benefits from combining - or packaging - a comprehensive set of end-to-end processes across core functions into a single, outsourcing arrangement - for example, accounting, tax and risk management.    
 
Bundled outsourcing also addresses the challenge of managing multiple providers and contacts.  It is easier to manage and measure because it creates standardized, repeatable processes under one integrated governance structure that ensures maximum performance at lower sustained costs.
 
3
 
 
Our Opportunity
 
SME company owners and managers often are tasked with functioning in a number of capacities in order to grow their business.   However, at some point in time in the growth curve, a business owner or manager is faced with the decision of continuing to function in a number of capacities or to seek outside assistance. To help with this decision, we bring outsourced people, business processes and software tools to businesses to reduce costs and to run more efficiently and effectively.  We believe that if a small business doesn’t embrace and leverage the power of outsourcing and automation, it significantly limits the company’s ability to keep pace with business growth goals and objectives.    As such, we believe that our Services met a large un-met need for SME companies.
 
The SME Market is particularly attractive because:
 
  ● 
it is large, continues to grow and remains underserved by professional services companies; and
 
  ● 
it typically has fewer in-house resources than larger businesses and, as a result, is generally more dependent on external resources;
 
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.
 
Over the next twelve months we plan to;
 
continue to standardize the processes of how our consulting services are provided. In January 2017 we introduced our new 4-Part Total Business Management Approach. The approach breaks down client’s businesses into 4 separate planning exercises;
 
1.
Business innovation and growth plan
2.
Risk management plan
3.
Capital funding plan
4.
Owner and employee wellness plan.
 
To support the delivery and manage the results of this approach we have developed a tool we refer to as our Business Innovation and Growth (BIG) Check-Up.
 
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. In February 2017, along with the launch of our new website we commenced our 1st major social media and internet marketing campaign. For the three months ended March 31, 2017, we acquired two new clients from the campaign.
 
 
4
 
 
Expand our custom “program offerings”. Along with the launch of our new website, we introduced some of the programs. That included, Healthcare Cost Containment, Cause-Related Marketing, Business Innovation & Growth (BIG) “Boot Camps.”
 
Refine through independent research and feed-back from clients, our database of what we consider best-in-class business software-as-a-service tools.     We currently have database of approximately 100 such products.
 
Further explore the use of “For-Cause Alliance Partnerships” whereby we partner up with non-profit educational-like mission based organizations to further both business plans and reputation with the local community
 
Results of Operations
 
Summary of Key Results
 
For the unaudited three month periods ending March 31, 2017 and 2016
 
Revenues and Cost of Revenues
 
Total revenue for the three months ended March 31, 2017 and 2016 was $12,500 versus $103,891, respectively. Revenues are from professional services. The decline in revenue was due to the completion of various engagements. The Company has been transition its business model to more of a package service with recurring monthly payments. The revenue for the period ended March 31, 2017 was a result of two new clients and one legacy client who engagement continues with the Company since March 31, 2016.
 
Cost of revenues for the three months ended March 31, 2017 and 2016 was $7,750 versus $54,781, respectively.   Cost of revenue included payments to third party independent contractors plus $4,750 and $30,150 paid to a related party for the three months ended March 31, 2017 and 2016, respectively. The decrease in cost of revenue was due to fewer clients and the shift of the Company’s business to more of a packaged services model with smaller fees but recurring monthly payments.
 
Operating Expenses
 
Total operating expenses for the three months ended March 31, 2017 and 2016, was $22,018 versus $53,950, respectively. The decrease was primarily due to decreased professional services fees. The Company and stock-based compensation of $0 and $1,640, respectively.
 
Liquidity and Capital Resources
 
As of March 31, 2017
 
At March 31, 2017, we had cash of $18,385 and a working capital deficit of $35,179.   Since inception, we have raised $35,500 in equity capital.    We had a total stockholders’ deficit of ($33,554) and an accumulated deficit of $70,695 as of March 31, 2017.
 
 
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We had $17,969 and $3,909 of cash used in operating activities for the three months ended March 31, 2017 and 2016, respectively.   These include a net loss of $14,457 and net income of $831, respectively.     Cash flows provided by (used in) operating activities included changes in operating assets and liabilities totaling ($3,837) and ($6,705) for the three months ended March 31, 2017 and 2016, respectively. During the three months ended March 31, 2017, MHL loaned the Company $8,500.
 
On March 8, 2017, we executed a promissory note for $25,000.
 
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.
 
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 then existing directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is us at is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we review the potential of conflicts of interest.
 
Off-balance sheet arrangements
 
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
 
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 and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.
 
 
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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.
 
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 or monthly based upon contract terms. Contracts may either be for a specific project or a monthly recurring fee.
 
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 report 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.
 
 
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(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
 
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: May 15, 2017
By:   
  //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
 
Chief Executive Officer, Chief Accounting Officer & Chairman
 
May 15, 2017
Mary Ellen Schloth
 
 
 
 
 
 
 
 
 
 
 
 
 
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