NEUROONE MEDICAL TECHNOLOGIES Corp - Quarter Report: 2017 March (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2017

-OR-

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities And Exchange Act of 1934 for the transaction period from _________ to________

Commission File Number: 333-169732

Original Source Entertainment, Inc.

(Exact name of Registrant in its charter)

Registrant's Telephone Number, Including Area Code: (708) 902-7450

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  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 (section 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 x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes x  No ¨

The number of outstanding shares of the registrant's common stock as of May 19, 2017 was 5,073,000 shares of its $.001 par value common stock.

ORIGINAL SOURCE ENTERTAINMENT, INC.

FORM 10-Q

INDEX

PART 1 – FINANCIAL INFORMATION

PART II - OTHER INFORMATION

Item 1. Financial Statements

ORIGINAL SOURCE ENTERTAINMENT, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of the financial statements

ORIGINAL SOURCE ENTERTAINMENT, INC.

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

The accompanying notes are an integral part of the financial statements

ORIGINAL SOURCE ENTERTAINMENT, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of the financial statements

ORIGINAL SOURCE ENTERTAINMENT, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Original Source Entertainment, Inc. (the “Company”), was incorporated in the State of Nevada on August 20, 2009 (“Inception”). The Company’s intent was to license songs to the television and music industry for use for use in television shows or movies. The Company has had limited activity and revenue to date and no longer has any assets or operations since the spin-off of its wholly owned subsidiary effective May 13, 2016, as further described below.

Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company’s year-end is December 31.

Unaudited Interim Financial Information

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the "SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto contained in the information as part of the Company's Annual Report on Form 10-K, which was filed with the SEC on April 17, 2017.

Discontinued Operations

On February 5, 2014, the board of directors of Original Source Entertainment authorized the spin-off of the Company's wholly-owned subsidiary, Original Source Music Inc., to shareholders of record as of February 25, 2014. All of the Company's assets and business operations at that time were held in Original Source Music, Inc. The spin-off was done in connection with a change of control of Original Source Entertainment. Under the terms of the spin-off, the Company’s common shares, par value $0.001 per share, would be distributed on a pro-rata basis to each holder of Original Source Entertainment’s common shares on the record date without any consideration or action on the part of such holders, and the holders of Original Source Entertainment’s common shares as of the record date would become owners of 100 percent of our common shares.

On May 13, 2016, the spin-off was completed due to the satisfactory resolution of all comments from the Securities and Exchange Commission to the Form 10 and the Form 10’s effectiveness.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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. 

Income Taxes

Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets, and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized.

Basic and Diluted Earnings (Loss) Per Share

The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period.  Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive.

During the three months ended March 31, 2017 and 2016, the Company did have potentially dilutive debt instruments outstanding that has been excluded from the earnings per share calculation, as such an inclusion would have been anti-dilutive due to losses incurred by the Company in both period and, therefore, basic and diluted earnings (loss) per share are equal in both periods.

Recent Accounting Pronouncements

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company other than those relating to Development Stage Entities as discussed above.

NOTE 2. GOING CONCERN

The Company has suffered a loss from operations and has negative cash flows from operations, and in all likelihood will be required to make significant future expenditures in connection with marketing efforts along with general administrative expenses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. By doing so, the Company hopes to generate sufficient capital to execute its business plan of licensing songs to the television and music industry for use for use in television shows or movies on an ongoing basis. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.

NOTE 3. ADVANCES PAYABLE - RELATED PARTY

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders.  Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.

As of March 31, 2017 and December 31, 2016, the amount outstanding was $77,046 and $73,758, respectively. The advances are non-interest bearing, due upon demand and unsecured. 

NOTE 4. SPIN-OFF

On February 5, 2014, the board of directors of Original Source Entertainment authorized the spin-off of the Company's wholly-owned subsidiary, Original Source Music Inc., to shareholders of record as of February 25, 2014. All of the Company's assets and business operations at that time were held in Original Source Music, Inc. The spin-off was done in connection with a change of control of Original Source Entertainment. Under the terms of the spin-off, the Company’s common shares, par value $0.001 per share, would be distributed on a pro-rata basis to each holder of Original Source Entertainment’s common shares on the record date without any consideration or action on the part of such holders, and the holders of Original Source Entertainment’s common shares as of the record date would become owners of 100 percent of our common shares.

On May 13, 2016, the spin-off was completed due to the satisfactory resolution of all comments from the Securities and Exchange Commission to the Form 10 and the Form 10’s effectiveness.

The prior financial statements have been revised to reflect the completed spin-off. 

NOTE 5. SUBSEQUENT EVENTS

In accordance with ASC 855-10, “Subsequent Events” the Company has analyzed its operations subsequent to March 31, 2017 to the date these financial statements were available to be issued. During this period, we did not have any significant subsequent events.

The Company’s Board of Directors and majority stockholder, who is also the Company’s Chief Executive Officer and sole director, authorized, as of April 17, 2017: (a) an amendment to the Company’s Articles of Incorporation to effect a change of name from “Original Source Entertainment, Inc.” to “NeuroOne Medical Technologies Corporation” (b) an amendment to the Company’s Articles of Incorporation to effect an increase in the number of authorized shares of common stock from 45,000,000 to 100,000,000 and to increase the number of authorized shares of preferred stock from 5,000,000 to 10,000,000; (c) a Certificate of Amendment to the Company’s Articles of Incorporation, which makes no material changes to the Company’s existing Articles of Incorporation other than incorporating the amendments described in the prior clauses (a) and (b); (d) a change to the Company’s state of incorporation from the State of Nevada to the State of Delaware pursuant to a plan of conversion in connection with which the Company will adopt a new certificate of incorporation and bylaws under the laws of the State of Delaware; and (e) the adoption of a 2017 Equity Incentive Plan. The Company is not required to effect any of clauses (a), (b) or (c) above, and may determine to do so only if and when a proposed business combination transaction with a third party is consummated, of which we can give no assurance of success.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operation, as well as in certain other parts of this quarterly report on Form 10-Q (as well as information included in oral statements or other written statements made or to be made by Original Source) that look forward in time, are forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, expectations, predictions, and assumptions and other statements which are other than statements of historical facts. Although Original Source believes such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to, and are qualified by, known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by those statements. These risks, uncertainties and other factors include, but are not limited to Original Source’s ability to estimate the impact of competition and of industry consolidation and risks, uncertainties and other factors set forth in Original Source’s filings with the Securities and Exchange Commission, including without limitation to this Quarterly Report on Form 10-Q.

Original Source undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.

General

We were incorporated under the laws of the State of Nevada on August 20, 2009. Our business from inception through to May 13, 2016 was to license songs to the television and music industry for use for use in television shows or movies. We have had limited activity and revenue to date. As of May 13, 2016, we spun-off Original Source Music, our wholly-owned subsidiary which holds all of our operations, to shareholders of record as of February 25, 2014. The spin-off was done in connection with a change of control of our company. Under the terms of the spin-off, Original Source Music’s common shares, par value $0.001 per share, were distributed on a pro-rata basis to each holder of our common shares on the record date without any consideration or action on the part of such holders, and the holders of our common shares as of the record date became owners of 100% of Original Source Music’s common shares, subject to applicable FINRA filings. Accordingly, we are a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have no specific business plan and purpose.

We currently have no employees other than our sole officer, who is also our sole director.

We do not have any definitive plans, proposals, arrangements or understandings with any representatives of the owners of any operating business or company regarding the possibility of an acquisition or merger. However, we are currently in negotiations with NeuroOne, Inc., a Delaware corporation (“NeuroOne”), with respect to a potential reorganization pursuant to which, as currently contemplated, we would acquire NeuroOne as our wholly-owned subsidiary and the stockholders of NeuroOne would exchange all of the issued and outstanding shares of common stock of NeuroOne currently held by them for shares of the Company’s Common Stock (the “Proposed Transaction”). As the definitive agreement and other transaction documents are still being negotiated, and the parties are still performing due diligence, we can give no assurance as to the ultimate form or terms of the Proposed Transaction or that the Proposed Transaction will be consummated at all.

Recent Events

Our Board of Directors and majority stockholder, who is also our Chief Executive Officer and sole director, authorized, on April 17, 2017:

We are not required to effect any of the above first three corporate actions, and may determine to do so only if and when the Proposed Transaction is consummated, of which we can give no assurance of success.

Critical Accounting Policies

The following discussion as well as disclosures included elsewhere in this Form 10-Q are based upon our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies. Original Source continually evaluates the accounting policies and estimates used to prepare the financial statements. Original Source bases its estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.

Trends and Uncertainties

There are no material commitments for capital expenditure at this time. There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on our limited operations. There are no known causes for any material changes from period to period in one or more line items of Original Source’s financial statements.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we have incurred losses of $8,754 and $8,959 for the three months ended March 31, 2017 and 2016, respectively, and have a working capital deficiency which raises substantial doubt about our ability to continue as a going concern.

Management believes the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations.

Management plans to seek additional debt and/or equity financing for the Company, but cannot assure that such financing will be available on acceptable terms.

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Results of Operations

During the three months ended March 31, 2017, we earned revenues of $0. We had general and administrative expenses of $8,754. As a result, we had a net loss of $8,754 for the three months ended March 31, 2017.

By comparison, during the three months ended March 31, 2016, we earned revenues of $0. We paid general and administrative expenses of $4,386 and had a loss from discontinued operations of $4,573. As a result, we had a net loss of $8,959 for the three months ended March 31, 2016.

The $205 decrease in net loss for the three months ended March 31, 2017 compared to the three months ended March 31, 2016 is primarily the result of the decrease in loss from discontinued operations of $4,573 offset by an increase in general and administrative expenses of $4,368 primarily from professional fees, which consist of fees paid for legal, accounting, and auditing services, were incurred primarily to enable us to satisfy the requirements of a reporting company.

Liquidity and Capital Resources

At March 31, 2017, and December 31, 2016 we had a cash balance of $0.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, Original Source has incurred losses of $8,754 and $8,959 for the three months ended March 31, 2017 and 2016, respectively, and a working capital deficiency which raises substantial doubt about the Company’s ability to continue as a going concern.

Management believes the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future, including as a result of the spin-off of our operating business as of May 13, 2016, and will need additional equity or debt financing to sustain its operations. Management plans to seek additional debt and/or equity financing for the Company, but cannot assure that such financing will be available on acceptable terms.

The Company’s continuation as a going concern is dependent upon its ability to ultimately attain profitable operations, generate sufficient cash flow to meet its obligations, and obtain additional financing as may be required. Our auditors have included a “going concern” qualification in their auditors’ report dated April 17, 2017. Such a “going concern” qualification may make it more difficult for us to raise funds when needed. The outcome of this uncertainty cannot be assured.

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Operating Activities

During the three months ended March 31, 2017, we used $3,288 in operating activities compared to $0 during the three months ended March 31, 2016.

During the three months ended March 31, 2017 we incurred a loss of $8,754 which was partially offset for cash flow purposes as we reduced our balance of accounts payable and accrued liabilities by $5,466. By comparison, during the three months ended March 31, 2016, we incurred losses of $8,959 which was partially offset for cash flow purposes by $4,015 in non-cash expenses and we decreased our balance of accounts payable and accrued liabilities by $ 4,686.

Investing Activities

During the three month periods ended March 31, 2017 and 2016, we did not pursue any investing activities.

Financing Activities

During the three months ended March 31, 2017, we received $3,288 by way of advances – related party. By comparison, we received $0 from advances – related party during the three months ended March 31, 2016.

Recently Issued Accounting Standards

Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.

Off Balance Sheet Arrangements 

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting companies.  

Item 4. Controls and Procedures

During the three months ended March 31, 2017, there were no changes in our internal controls over financial reporting (as defined in Rule 13a- 15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of March 31, 2017. Based on this evaluation, our chief executive officer and principal financial officer have concluded such controls and procedures to be ineffective as of March 31, 2017 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

The Company was not subject to any legal proceedings during the three month periods ended March 31, 2017 and 2016 and none are threatened or pending to the best of our knowledge and belief.

Item 1A.  Risk Factors

Not applicable for smaller reporting companies  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Defaults Upon Senior Securities.

No senior securities were issued or outstanding during the three months ended March 31, 2017 or 2016.

Item 4.  Mine Safety Disclosures

Not applicable to our Company.

Item 5.  Other Information

None.

Item 6.  Exhibits

    Exhibit 31 - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

    Exhibit 32 - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

    Exhibit 101.INS  XBRL Instance Document

    Exhibit 101.SCH  XBRL Taxonomy Extension Schema Document

    Exhibit 101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document

    Exhibit 101.DEF  XBRL Taxonomy Extension Definition Linkbase Document

    Exhibit 101.LAB  XBRL Taxonomy Extension Label Linkbase Document

    Exhibit 101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document

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.  

Dated: May 22, 2017

ORIGINAL SOURCE ENTERTAINMENT, INC.  

By: /s/ Amer Samad

Amer Samad

Chief Executive Officer

(Principal Executive Officer)

(Principal Financial Officer)