NMTC

Business Context and Reporting Period

Company: Original Source Entertainment, Inc. (Note: Metadata lists "NEUROONE MEDICAL TECHNOLOGIES Corp," but the filing text identifies the registrant as Original Source Entertainment, Inc.)
Period: Fiscal year ended December 31, 2013
Business Model: A development-stage company incorporated in Nevada in 2009, formed to license songs to the television and movie industry. The company contracts with artists to obtain non-exclusive licensing and publishing rights in perpetuity.
Recent Developments: On March 5, 2014, following the filing date, founder Lecia L. Walker and a former director sold approximately 69% of outstanding shares to Amer Samad, who was appointed CEO. Ms. Walker resigned from officer positions but remained a director pending further filings.

Key Financial Metrics

Debt and Liquidity: The company has no external bank debt. Liabilities consist entirely of related-party notes payable ($22,000) and convertible notes payable ($6,000), both owed to shareholder Ms. Walker. Cash flow from operations was negative $25,093 in 2013, offset by $24,500 in financing activities (notes and capital contributions from Ms. Walker).

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased by 35.6% from $921 in 2012 to $1,249 in 2013, though absolute amounts remain negligible.
• Expense Increase: Operating expenses increased by 79.7% ($11,688), driven primarily by professional fees (legal, accounting, auditing) required to maintain reporting status.
• Loss Expansion: Net loss more than doubled from $13,960 to $30,554 due to the disproportionate rise in operating costs relative to revenue.
• Liquidity Deterioration: Cash on hand decreased by $593, and the working capital deficit widened by $13,054.

Outlook, Risks, and Management Commentary

Going Concern: The auditors have issued a "going concern" qualification. The company has incurred losses since inception and has a significant working capital deficit. Continuation as a going concern is dependent on the ability to raise additional capital and attain profitable operations.

Internal Controls: Management concluded that internal controls over financial reporting were ineffective as of December 31, 2013. A material weakness was identified regarding the lack of segregation of duties and insufficient resources to generate necessary disclosures.

Accountant Change: The company changed auditors during the period. Ronald R. Chadwick P.C. resigned on November 30, 2013, and Cutler & Co., LLC was engaged on February 14, 2014. There were no disagreements regarding accounting principles.

Strategy: The company intends to focus on the "source music" niche (music heard by characters in productions) and expand into cues and transitional music. However, management notes that revenues will not significantly increase until substantial funds are raised for marketing.

Investor Verification Checklist

• Capital Sufficiency: Verify if the company has secured the additional financing required to fund operations, given the $525 cash balance and $30,291 deficit.
• Related Party Transactions: Confirm the terms and repayment status of the $28,000 in debt owed to the controlling shareholder (Ms. Walker), which represents 100% of current liabilities.
• Management Transition: Assess the impact of the March 2014 change in control (69% stake sale to Amer Samad) on the company's strategic direction and ability to execute its business plan.
• Revenue Concentration: Note that historically, Warner Bros. generated approximately 90% of revenues; verify if this concentration persists or if new customers have been acquired.
• Internal Controls: Monitor for remediation of the material weakness in internal controls, which poses a risk to the reliability of future financial reporting.