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[February 10, 2014]
OAKRIDGE INTERNATIONAL CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Edgar Glimpses Via Acquire Media NewsEdge) As used in this Form 10-Q, references to the "Company," "we," "our," "us" or "Oakridge" refer to Oakridge International Corporation, unless the context otherwise indicates.
Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Critical Accounting Policy and Estimates Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in our Quarterly Report on Form 10-Q for the period ended December 31, 2013.
6 -------------------------------------------------------------------------------- Operation Overview Business of the Issuer Oakridge International Corporation was an environmental services company planning to engage in the business of waste management, trading and recovering raw materials from electronic printed circuit boards and other electronic products and components. Our plan was to own facilities in Australia and or Hong Kong for the waste management and recovering of raw materials from electronic printed circuit boards and other electronic products and components. However due to the capital requirement to roll out this business, the management of the Company has determined to focus on the sourcing, marketing and trading of consumer electronics products which requires less capital. The Company will review its environmental services business when the Company has adequate resources to pursue this business.
History In March 2008, the Company entered into an agreement for a technology for recovering electronic components from electronic printed circuit boards. The Company evaluated the technology but could not raise the necessary funds to keep the technology and our rights to the technology expired in October 2009. From that date onwards, we have been evaluating other technologies in the recovery of raw materials from Printed Circuit Boards. However due to our limited resources available, we were not able to actively pursue alternative solutions as that would involve investment into test equipment or process.
In May 2011, the Group received a Letter of Authorization to appoint our then wholly owned subsidiary as an official reseller for a waste packing system in China for until the end of 2011. The Company intended to raise some capital in order to pursue the waste packing system and alternative technology for the recovery of raw materials from electronic printed circuit boards. However, we were not successful in the fund raising by the end of 2011.
We are a development stage company that has generated modest revenues of $11,295 from operations since our incorporation on October 31, 2007 to December 31, 2013. We have incurred losses since our inception.
For the three months ended December 31, 2013, we did not earn any revenue. The Group continued in focusing on the sourcing, marketing and trading of consumer electronics business. A summary of our future plans is described below.
General The Company intends to source, imports, markets, sells a variety of consumer electronic products to international markets under our own brand names or under our customers' brand names. The intended products include 4K TVs, 3D TVs, mobile devices, computer monitors, computer accessories products such as thumb drives, computer mouse, etc.
The Company intends to work with design house to secure innovative products for marketing and distribution in the international markets.
The Company further intends to try to secure by either acquisition or through licensing programs, international brands for our high end electronic products.
7 -------------------------------------------------------------------------------- Build Up of Future Operational Infrastructure The Company believes it should build up its business operations so that it will possess an advantage over its competitors due to the combination of: i) having a recognition brand ii) company sourcing of innovative products from design house iii) an infrastructure with experienced personnel in servicing and providing logistic support for mass merchant channels.
The Company intends to build up its core competencies in sourcing innovative designs and products to offer a broad variety of current and new consumer electronic products to customers. In addition, the Company intends to enter into brand licensing arrangements to use trade names and trademarks on products to earn higher profit margin on the products. The Company will seek to enter into distribution agreements that leverage the branded products and utilize the logistical and sourcing infrastructures for products that are more efficiently marketed through these agreements. The Company intends to evaluate potential licenses and distribution agreements.
The Company's new core business will consists of selling, distributing, and licensing various low to high priced consumer electronic products in various categories. It is planned that a substantial portion of the Company's marketing and sales efforts are concentrated in the Asia Pacific and Europe region, although we also sell our products in certain other international regions.
Marketing and Growth Strategy The Company believes growth opportunities exist through the implementation of the following: • source innovative consumer electronic products by securing product designs; • create distribution channels for customers offering branded products; • focus on penetration into the markets with multiple branded products offered and sold; • expansion of the Company's customer base in the Asia Pacific region through our contacts and relationship of our directors and outside sales representative organizations; • development of the Company's direct to consumer sales channel, primarily through the development of our website; and • expansion through strategic mergers with and acquisitions of other businesses.
A principal component of the Company's growth strategy is to build a global recognition of its sourcing services, and brand names and reputation for quality and cost competitive products to aggressively promote its products within its targeted markets. The Company believes that it will be able to compete more effectively by applying innovative approaches to its product lines and augmenting its product lines with complementary products. The Company intends to pursue such plans either independently or through relationships with other companies as well as license arrangements, distributorship agreements and joint ventures.
Summary of Our Plans To implement our business plan, apart from additional financing, we will need to negotiate and secure contracts with acceptable terms for: * Sourcing of innovative and competitive electronic products from design houses * Securing reliable and quality manufacturers * Securing customers for our products * Securing and entering into brands and licensing arrangements 8 -------------------------------------------------------------------------------- Competition The Company will compete in the all priced sector of the consumer electronics market. We estimate that the Company has several dozen competitors that are manufacturers and/or distributors, many of which are much larger and have greater financial resources than the Company. The Company competes primarily on the basis of: * reliability * quality * price * design * quality of service and support provided to retailers and their customers Product Liabilities and Insurance Due to the nature of the consumer electronic products we intend to sell, the Company will periodically subject to product liability claims resulting from personal injuries. The Company may also become involved in various lawsuits incidental to its business.
The Company intends to take out insurance coverage for its products and business operations, however, any claims substantially in excess of the Company's insurance coverage, or any substantial claim not covered by insurance, would have a material adverse effect on the Company's financial condition and results of operations.
Warranties The Company intends to offer limited warranties for its consumer electronics products, comparable to those offered to consumers by the Company's competitors and or offered from the manufacturer, depending on the products and terms of sales. Such warranties typically consist of a one year period, under which the Company pays for labor and parts, or offers a new or similar unit in exchange for a non-performing unit.
9 -------------------------------------------------------------------------------- Twelve Months Operating Plan Over the next twelve months, our operating plan will be focused on developing our operations in the sourcing of consumer electronic products. Initially we will recruit a sales and marketing team to source popular consumer electronic products and to identify suitable manufacturers for these products. Our marketing team will then try to match these products to our customers.
Our financial plan is to obtain sufficient funding for the trading and marketing services for consumer electronic products. The trading of the consumer electronic products requires funding of about US$1,000,000 to buy consumer electronics and selling to our customers. The working capital funding is expected to be US$350,000. We will seek to raise development and operation funds for the next twelve months by equity offering to support these plans. In addition, management is seeking strategic investors and partners to support our business.
Research and Development Since incorporation, the Company has not embarked on any research and development program and has not incurred or is expecting to incur any such costs.
Costs and Effects of Compliance with Environmental Laws We currently do not expect there will be any additional costs and effects of compliance with environmental laws in our current plan of operation Employees As of December 31, 2013, we have 6 staff, including our two directors, in the Company. Subject to financing, in the next 12 months, we plan to hire consultants in Hong Kong and China to undertake and implement the operational plans.
Results of Operations FOR THE THREE MONTH PERIOD AND SIX MONTH PERIOD ENDED DECEMBER 31, 2013, THE THREE MONTH AND SIX MONTH PERIOD ENDED DECEMBER 31, 2012 AND FOR THE PERIOD FROM OCTOBER 31, 2007 (INCEPTION) TO DECEMBER 31, 2013 REVENUES For the three months and six months period ended December 31, 2013 and 2012, the Company has realized no revenue and incurred no cost of revenue and no gross profit. We hope to generate additional revenue when we receive more contracts and as we continue to develop the business.
For the period from October 31, 2007 (date of inception) to December 31, 2013, the Company realized revenue of $11,295, incurred a cost of revenue of $10,821 and achieved a gross profit of $474.
OPERATING EXPENSES For the three months ended December 31, 2013 and 2012, the Company had incurred no gross profit and our total operating expenses were $30,157 and $66,929, respectively, all of which were selling, general and administrative expenses.
Our net loss to our shareholders for the three months ended December 31, 2013 and 2012 was $30,157 and $66,929, respectively.
For the six months ended December 31, 2013 and 2012, the Company had incurred no gross profit and our total operating expenses were $57,451 and $134,587, respectively, all of which were selling, general and administrative expenses.
Our net loss to our shareholders for the six months ended December 31, 2013 and 2012 was $57,451 and $134,587, respectively.
For the period from October 31, 2007 (date of inception) to December 31, 2013, the accumulated gross profit was $474, and our total operating expenses were $348,457, all of which were selling, general and administrative expenses. We incurred a gain on disposal of subsidiary of $2,279, resulting in an accumulated net loss to our shareholders for the period ended December 31, 2013 of $345,704.
10 -------------------------------------------------------------------------------- Liquidity and Capital Resources We do not have sufficient resources to accomplish our business plans. As of December 31, 2013, we had $8,666 in cash.
We will have to raise funds to pay for our expenses and accomplish our business plans. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans or lines of credit. Our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.
Going Concern Consideration The Company is a development stage company and has commenced operations. The Company had realized no revenue and incurred a net loss of $30,157 for the three months ended December 31, 2013 and an accumulated net loss of $345,704 for the period from October 31, 2007 (inception) to December 31, 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in emerging markets and the competitive environment in which the Company operates.
The Company is pursuing financing for its operations. In addition the Company has commenced operations to earn revenues. Failure to secure such financing, to raise additional equity capital and to earn revenue may result in the Company depleting its available funds and not being able to pay its obligations. These consolidated financial statements do not include any adjustment to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
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