10QSB 1 f10qs4oc.txt OCIS 10QSB-SEPTEMBER 30, 2004 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2004 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934 Commission File Number: 333-91436 OCIS Corp. ----------------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 26-0014658 ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2081 South Lakeline Drive, Salt Lake City, Utah 84109 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (801) 467-4566 ------------------------------- (Issuer telephone number) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 1,017,000 shares of its $0.001 par value common stock as of October __, 2004. Transitional Small Business Disclosure Format (check one) Yes [ ] No [X] 2 PART I-FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OCIS Corp. FINANCIAL STATEMENTS (UNAUDITED) September 30, 2004 The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company. 3 OCIS CORP. (A Development Stage Company) BALANCE SHEETS ASSETS September 30, December 31, 2004 2003 ---------------- -------------- (Unaudited) CURRENT ASSETS: Cash in bank $ 48,321 $ 104,759 Accounts Receivable 40,576 - Inventory 10,537 6,358 ------------ ------------ Total Current Assets 99,434 111,117 ------------ ------------ TOTAL ASSETS $ 99,434 $ 111,117 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 5,675 $ 10,443 Due to officers and stockholders - 10,945 Accrued interest payable - officers and stockholders - 379 Note payable - officer - 4,545 ------------ ------------ Total Current Liabilities 5,675 26,312 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT): Preferred stock; $.001 par value, 10,000,000 shares authorized, no shares issued and outstanding - - Common stock $.001 par value, 90,000,000 shares authorized, 1,017,000 shares issued and outstanding both periods 1,017 1,017 Capital in excess of par value 131,324 131,324 Deficit accumulated during the development stage (38,582) (47,536) ------------ ------------ Total Stockholders' Equity 93,759 84,805 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 99,434 $ 111,117 ============ ============ The accompanying notes are an integral part of these financial statements. 4 OCIS CORP. (A Development Stage Company) STATEMENTS OF OPERATIONS (Unaudited)
For the Three For the Nine Cumulative Months Ended Months Ended From Inception September 30, September 30, February 6, 2002 ----------------------- ---------------------------------- To September 30, 2004 2003 2004 2003 2004 ------------- ------------ ------------------- -------------- --------------- REVENUE Sales $ 54,784 $ 7,000 $ 55,604 $ 11,830 $ 81,774 Cost of goods sold (26,518) (19,023) (28,838) (22,467) (66,537) ---------- ----------- --------------- ------------ ------------- Gross profit (loss) 28,266 (12,023) 26,766 (10,637) 15,237 ---------- ----------- --------------- ------------ ------------- EXPENSES: Selling, general and administrative 7,460 3,774 18,151 9,227 51,072 ---------- ----------- --------------- ------------ ------------- Total Expenses 7,460 3,744 18,151 9,227 51,072 ---------- ----------- --------------- ------------ ------------- NET INCOME (LOSS) FROM OPERATIONS 20,806 (15,797) 8,615 (19,864) (35,835) OTHER INCOME (EXPENSE) Interest income 125 - 375 - 888 Interest expense - (453) (36) (1,339) (3,635) ---------- ----------- --------------- ------------ ------------- TOTAL OTHER INCOME (Expense) 125 (453) 339 (1,339) (2,747) NET INCOME (Loss) BEFORE INCOME TAXES 20,931 (16,250) 8,954 (21,203) (38,582) Provision for income taxes - - - - - ---------- ----------- --------------- ------------ ------------- NET INCOME (LOSS) $ 20,931 $ (16,250) $ 8,954 $ (21,203) $ (38,582) ========== =========== =============== ============ ============= INCOME (LOSS) PER SHARE $ 0.02 $ (0.03) $ 0.01 $ (0.04) $ (0.05) ========== =========== =============== ============ ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,017,000 600,000 1,017,000 600,000 763,174 ========== =========== =============== ============ =============
The accompanying notes are an integral part of these financial statements. 5 OCIS CORP (A Development Stage Company) STATEMENTS OF CASH FLOWS (Unaudited)
Cumulative from Inception, For the Nine Months Ended February 6, 2002 September 30, to September 30, ---------------------------------------------------- 2004 2003 2004 --------------- ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Cash from sale of equipment $ 15,082 $ 11,689 $ 41,562 Cash paid to suppliers and others (55,990) (8,921) (87,844) Cash from interest income 375 - 888 Cash paid for interest (415) (1,450) (3,635) -------------- -------------- -------------- Cash used in operating activities (40,948) 1,318 (49,029) -------------- -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES - - - -------------- -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Sale of common stock - 55 129,250 Due to officers (10,945) 8,945 - Payment on note payable (4,545) (10,239) (31,900) -------------- -------------- -------------- Cash Provided by (Used in) financing activities (15,490) (1,239) 97,350 -------------- -------------- -------------- NET CHANGE IN CASH (56,438) 79 48,321 CASH AT THE BEGINNING OF THE PERIOD 104,759 1,194 - -------------- -------------- -------------- CASH AT THE END OF THE PERIOD $ 48,321 $ 1,273 $ 48,321 ============== ============== ============== RECONCILIATION OF NET INCOME (LOSS) TO CASH USED IN OPERATING ACTIVITIES NET INCOME (LOSS) $ 8,954 $ (21,203) $ (38,582) Adjustment to reconcile net income (loss) to net cash used in operating activities Offering costs charged to Capital in Excess of Par - - (1,909) Stock issued to acquire inventory - - 5,000 Debt Issued to acquire inventory - (13,271) 31,900 Changes in assets and liabilities (Increase) decrease in accounts receivable (40,576) - (40,576) (Increase) decrease in inventory (4,179) 31,144 (10,537) Increase (decrease) in accounts payable and accrued expenses (4,768) 4,760 5,675 Increase (decrease) in accrued interest (379) (112) - -------------- -------------- -------------- NET CASH USED IN OPERATING ACTIVITIES $ (40,948) $ 1,318 $ (49,029) ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 6 OCIS, CORP. (A Development Stage Company) NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 1 - CONDENSED INTERIM FINANCIAL STATEMENTS The accompanying unaudited condensed financial statements include the accounts of OCIS Corp. These statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the Company's most recent annual financial statements for the year ended December 31, 2003 and for the period from inception, February 6, 2002, through December 31, 2003, included in Form 10-KSB filed with the U.S. Securities and Exchange Commission on April 14, 2004. In particular, the Company's significant accounting policies were presented as Note 2 to the financial statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed financial statements for the period ended September 30, 2004 are not necessarily indicative of the operating results that may be expected for the full year ending December 31, 2004. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - The Company was organized under the laws of the State of Nevada on February 6, 2002 and has elected a fiscal year end of December 31. The Company intends to engage in business operations to buy used equipment wholesale and to sell it to other dealers or to retail customers. To this end, the Company has acquired an inventory of used material handling equipment. The Company is considered a development stage company as defined in SFAS No. 7. The Company has at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors. All of the Company's revenue to date has been from sales to companies located in Utah. Net Earnings Per Share - The computation of net income (loss) per share of common stock is based on the weighted average number of shares outstanding during the periods presented. Income Taxes Due to losses through September 30, 2004 and since inception, no provision for income taxes has been made. There are no deferred income taxes resulting from income and expense items being reported for financial accounting and tax reporting purposes in different periods. Deferred income tax assets arising from net operating losses have been fully offset by valuation allowances, in accordance with SFAS No. 109 "Accounting for Income Taxes" due to the uncertainty of their realization. Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. During the periods ending September 30, 2004 and 2003, the Company did not have non-cash investing activities. 7 OCIS, CORP. (A Development Stage Company) NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Inventory - Inventory consists of used finished materials handling equipment purchased for resale and is stated at the lower of cost determined by the first-in first-out (FIFO) method or market. Inventory cost includes those costs directly attributable to the product before sale. Revenue recognition - The Company recognizes revenue at the time the sale of the used equipment takes place and title has transferred to the customer upon shipment or delivery. The Company has recognized $81,774 of sales since inception, February 6, 2002. NOTE 3 - COMMON STOCK TRANSACTIONS On December 30, 2003 the Company closed an offering for the sale of a minimum of 300,000 shares or maximum of 600,000 shares of its authorized but previously unissued common stock at $0.25 per share. The shares were offered pursuant to a Form SB-2 Registration Statement under the Securities Act of 1933. The Company accepted subscriptions for the purchase of 417,000 shares for a total of $104,250. The officers of the Company acted as sales agents and no commissions were incurred by the Company. A total of $1,909 in expenses directly related to the offering was offset against capital in excess of par value. No additional shares were sold during the period ended September 30, 2004. NOTE 4 - DEVELOPMENT STAGE COMPANY AND GOING CONCERN The Company is in the development stage as defined in Financial Accounting Standards Board Statement No. 7 and has incurred significant cumulative net losses. As reported in the financial statements, the Company has a cumulative gross profit of $15,237 from the sale of used materials handling equipment and an accumulated deficit of $38,582. At September 30, 2004 the Company's only assets are $48,321 cash, accounts receivable of $40,576 and an inventory of used materials handling equipment held for sale valued at $10,537. The Company has current liabilities totaling $5,675. The Company recently completed the sale of 417,000 shares of its common stock at $0.25 per share to raise capital so that it can develop successful operations per its business plan. However, there can be no assurance that the funds raised will be sufficient or that the Company will be able to obtain additional funding or generate profitable operations, or that other funding, if obtained in adequate amounts, will be on terms favorable to the Company to execute its business plan. 8 OCIS, CORP. (A Development Stage Company) NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 4 - DEVELOPMENT STAGE COMPANY AND GOING CONCERN (continued) The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it is able to engage in profitable business operations. The Company's inability to obtain additional funding, as required, would severely impair its business operations and there can be no assurance that the Company's operating plan will be successful. If the Company is unable to obtain adequate capital it could be forced to cease operations. Ultimately, however, the Company will need to achieve profitable operations in order to continue as a going concern. Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ------------------------------------------------- This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management. Statements in this periodic report that are not historical facts are hereby identified as "forward-looking statements." General --------- Organization and Corporate History OCIS Corp. was organized on February 6, 2002, in the state of Nevada. OCIS was organized to engage in the purchase and sale of used business equipment with an initial emphasis on used warehousing equipment. As part of the organization of OCIS, an initial inventory was purchased and a president with experience in the used equipment market was appointed. The initial equipment inventory primarily consisted of warehousing rack systems and forklifts. Business in General Our initial focus is on buying and selling used warehouse storage systems and office components that will facilitate office, commercial and industrial users with their inventory control, manufacturing process and or office equipment needs. Once we have established a foothold in the warehousing and office components market, we plan on expanding to encompass other used business equipment. As part of the organization of OCIS, we purchased an initial inventory which consisted of warehousing rack systems and forklifts. Most of the initial inventory has now been sold. OCIS is hopeful that we will be able to initially roll our inventory, sell and purchase inventory, three times per year. With the proceeds from our recent offering, OCIS is actively looking for additional inventory to sell. Inventory purchase will be driven by market conditions in various industries. As market conditions weaken in an industry, it is often a good time for companies, such as OCIS, to purchase equipment. As the market conditions improve, OCIS will then be able to sell the inventory to expanding companies. Inventory purchases often reflect conditions in geographical areas. As certain areas of the country expand and contract, companies like OCIS are able to move office and warehousing equipment from contracting areas to expanding areas. Management believes the used equipment market will expand as the economy improves. As companies begin to expand, they will need to purchase additional equipment. Management believes companies will focus more on used equipment since it is more economical to purchase and generally functions as well as new equipment. 10 Products and Services --------------------- OCIS initial focus is going to be on warehousing equipment with the majority of its current and past inventory consisting of warehousing rack systems and related equipment such as forklifts and conveyors. Management will not, however, limit itself to any particular business equipment. In addition to warehouse equipment, management will focus on office equipment including partitions, desks, work spaces and cabinets. Initially, management will not focus on computer or server related systems because of the short life cycle and obsolescence in these areas and the current glut of used computer equipment. Instead, management intends to focus on business equipment that has long life cycles. Marketing and Distribution -------------------------- OCIS's management relies on industry contacts to locate used equipment. OCIS' president, Brent Schlesinger, has been in the material handling industry for over twenty years. His experience and contacts developed as president and senior management of other companies have brought him into contact with many companies in the United States and with material handling specialist (inventory managers) at these companies. Mr. Schlesinger also keeps in contact with the auction companies that liquidate industrial equipment. These companies will contact those people in the industry, such as Mr. Schlesinger, as they need to liquidate or acquire equipment. Mr. Schlesinger also spends time personally contacting business to inform them of product offerings. These contacts are aimed at finding not only customers to purchase used equipment but to find any businesses that have equipment they would like to sell. As funds permit and, depending on the type of equipment OCIS has in inventory, we will advertise our products in trade journals and in local papers. The kind of equipment in inventory often will dictate the type of marketing program we have in place. With equipment like warehousing, the potential customers are often known to us or readily identifiable so we will use more direct marketing and personal sales efforts to these companies. If our inventory consists of office equipment, we will rely on advertising in local papers and trade journals as the most effective marketing campaign. The nature of our products will require that our market area be limited to Utah and the surrounding states, at first. The geographical limit is the result of the size of our products currently being offered. The transportation of the products has to be done by truck or trailer. The longer the distance from our storage facility in Utah the more difficult and expensive it will be to deliver the products. Accordingly, until our business expands to the point we feel a new facility can be opened in another region of the country, we will limit our geographical area to Utah and our surrounding states which are within a day's drive of our yard. These states would be Idaho, Nevada, Wyoming and Colorado. We anticipate most of our business at first to be within Utah and slowly expanding to the broader areas of Idaho, Colorado, Wyoming and Nevada. By limiting our geographical coverage, most of our shipping can be done with pickup trucks and rented trailers or through a rental of a local semi trailer for the day. To date, there has been no shipping cost involved in any sales. This helps keep our cost down by not having to incur or pass along expensive shipping cost. It also allows us to store all of our inventory at a yard without having to have other storage facilities around the country. All products are simply stored at our yard until the day they need to be loaded and delivered to a client's facility. With many customers located in the same area, customers are also able to pick up the products themselves and save any shipping cost. We typically will try and pass along the shipping cost if possible. However, in an industry where competition is based on price, we may have to absorb some of the shipping cost. 11 Manufacturing, Supplies, and Quality Control OCIS does not manufacture any equipment. OCIS does inspect all equipment to assure that it is in good condition prior to any purchase or sale. We do not provide any warranties to the equipment we sell. All equipment is sold "as is." Inventory on hand will vary as funds permit. Management is hopeful that funds from the offering completed in 2003, will enable to increase our inventory and take advantage of the ability to purchase additional inventory if a good opportunity presents itself. Presently, existing capital will not allow us to purchase all the inventory we want and we have had to pass on the opportunity to purchase some office and warehousing equipment at favorable prices. Management intends to purchase as much new inventory as funds permit with the profits from the sales. Liquidity and Capital Resources ------------------------------- OCIS relied on capital from founders to fund operations until proceeds of the 2003 offering were received. With the proceeds from the offering, OCIS had approximately $100,000 to use to operate and purchase inventory for sale. As of September 30, 2004, OCIS had working capital of $93,759 which includes $10,537 in inventory. Management intends to use these funds to purchase additional inventory and operate. To date, most expenses have been for professional services such as accounting and attorney's fees in organizing OCIS and conducting initial audits. As sales have increased, we have seen a rise in selling and general and administrative expenses. We anticipate monthly ongoing expenses to be held to a minimum until revenue allows us to expand our workforce, advertise and purchase additional inventory. We are trying to keep our cash needs to a minimum until we start receiving revenue from sales of product. Results of Operations --------------------- For the quarter ended September 30, 2004, we had revenues of $54,784 compared to revenue of $7,000 for the three months ended September 30, 2003. For the nine months ended September 30, 2004, we had revenues of $55,604 compared to revenues of $11,830 for the nine months ended September 30, 2003. We had a net income of $20,931 for the quarter ended September 30, 2004, compared with a net loss of $16,250 for the quarter ended September 30, 2003. OCIS management anticipates costs will remain relatively constant over the next quarter with the primary focus on buying additional products for sale. Selling expenses may vary depending on if commission or other fees are paid on sales. OCIS management is hopeful sales will increase in 2005. At this time no assurance can be made that sales will increase. As OCIS moves into an operating position, OCIS management anticipates more cost for operations such as advertising, marketing and storage-related fees for inventory. At this time it is difficult to predict all the cost since management is in the process of acquiring additional inventory to sell and has not been active in pursuing sales. During the remainder of 2004 and first part of 2005, management hopes sales to increase or stay steady. As sales increase, expenses are anticipated to increase. Results for the September 2004 quarter may not be indicative of future results with the majority of sales being one client who purchased a racking system. Future results will very depending on the inventory composition management is able to obtain. 12 ITEM 3. CONTROLS AND PROCEDURES a) Evaluation of Disclosure controls and procedures. ------------------------------------------------- OCIS' principal executive officers, including principal accounting officers have reviewed the disclosure controls and procedures (as defined in section 240.15d-14 in place to assure the effectiveness of such controls and procedures. This review occurred within 90 days of this filing. Based on this review, the principal executive officers and accounting officers believe OCIS' disclosure controls and procedures are adequate. b) Changes in Internal Controls. ----------------------------- There were no significant changes in OCIS' internal controls, or other factors, that could significantly affect OCIS' controls subsequent to the date of the evaluations performed by the executive officers of OCIS. No deficiencies or material weaknesses were found that would require corrective action. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES In December 2003, OCIS completed the sale of shares of its common stock pursuant to a registration statement filed with the Securities and Exchange Commission, file no. 333-91436. OCIS raised a total of $104,250 through the sale of 417,000 shares of common stock to 50 shareholders at an offering price of $0.25 per share. The offering was subsequently closed on December 30, 2003. The offering was for the sale of a minimum of 300,000 shares and a maximum of 600,000 shares. A total of $1,909 in direct expenses, exclusive of legal and accounting fees, of the offering were incurred resulting in net offering proceeds of $102,341. The officers and directors of OCIS acted as sales agents and no commissions or other fees were paid to the officers and directors for the sale of the shares. Since the offering was closed at the end of September 30, 2004, we have used $42,230 of the proceeds for the purchase of inventory, payment of expenses and liabilities. This number is an estimate based on use of cash by OCIS. Since OCIS has had sales and a profit over the last quarter, it is difficult to say the exact amount of proceeds used versus revenue. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. ---------- Item 4 Instruments Defining the Rights of Security Holders ------- --------------------------------------------------- 4.01 4 Specimen Stock Certificate Incorporated by reference* 31.01 31 CEO certification Pursuant to 18 USC Section 1350, as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002 This Filing 31.02 31 CFO certification Pursuant to 18 USC Section 1350, as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002 This Filing 32.01 32 CEO Certification pursuant to section 906 This Filing 32.02 32 CFO Certification pursuant to Section 906 This Filing * Incorporated by reference from the Company's registration statement on form SB-2 filed with the Commission, SEC file no. 333-91436. (b) Reports on From 8-K. -------------------- None 14 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. OCIS Corp. Dated: November 12, 2004 By: /s/ ---------------------------------- Kirk Blosch, Principal Accounting and Chief Financial Officer