SEC Filing Summary: Surna Inc. (Form 10-Q)
Business Context and Reporting Period
This filing covers the quarterly period ended August 31, 2010, for Surna Inc., a Nevada corporation classified as a shell company and a development stage company. The registrant has not commenced commercial operations or generated any revenue. The company is currently focused on completing a public offering to fund the development of software products and an e-commerce website.
Key Financial Metrics
| Metric | Value (as of Aug 31, 2010) |
|---|---|
| Revenue | $0 |
| Net Loss (9 months) | $(11,317) |
| Net Loss (Since Inception) | $(26,317) |
| Total Assets | $3,222 |
| Total Liabilities | $14,539 |
| Shareholder Loans | $14,400 |
| Cash and Cash Equivalents | $0 |
| Common Shares Outstanding | 15,000,000 |
Note: The filing text does not provide data for profit margins or operating cash flow generation as the company has no revenue.
Material Changes and Operational Status
- Accumulated Deficit: The accumulated deficit increased from $(15,000) as of November 30, 2009, to $(26,317) as of August 31, 2010.
- Expense Drivers: Expenses for the nine months ended August 31, 2010, totaled $11,317, primarily driven by professional fees ($5,700), software development ($4,504), and rent ($1,088).
- Liquidity Position: The company reported zero cash on hand at the end of the period. Operations are funded entirely by shareholder loans and prior equity sales.
- Related Party Transactions: 7bridge Capital Partners advanced $14,400 in non-interest bearing, unsecured loans due on demand.
Outlook, Risks, and Management Commentary
- Going Concern: Management and auditors have expressed substantial doubt about the company's ability to continue as a going concern. The company requires additional capital to pay bills and commence operations.
- Public Offering: The company filed a Form S-1 (effective August 26, 2010) to offer up to 1,500,000 shares at $0.10 per share. As of October 13, 2010, 30,000 shares had been sold, raising $3,000.
- Plan of Operation: Upon closing the offering, the company intends to spend funds on office setup ($10,000), website development ($5,000–$10,000), marketing ($15,000–$35,000), and further software development ($5,000–$20,000).
- Internal Controls: Management concluded that disclosure controls and procedures are not effective due to a lack of qualified accounting personnel and segregation of duties.
- Risks: Failure to raise sufficient capital will result in the suspension or cessation of operations. There is no guarantee of future financing or profitability.
Investor Verification Checklist
- Capital Sufficiency: Verify the current status of the public offering and whether the $3,000 raised to date is sufficient to meet the minimum funding requirements for operations.
- Debt Obligations: Confirm the terms and repayment status of the $14,400 shareholder loan from 7bridge Capital Partners, which is due on demand.
- Going Concern Status: Assess the likelihood of securing additional equity financing given the zero cash balance and lack of revenue.
- Internal Controls: Evaluate the risk of financial misstatement given the admitted lack of effective internal controls and qualified accounting staff.
- Shell Company Status: Note that the company is registered as a shell company with no active business operations.