Filing summary
Issuer discrepancy: The request identifies Flux Power Holdings, Inc., but the supplied Form 10-Q is for Lone Pine Holdings, Inc. Confirm the filing belongs to the intended company before relying on these figures.
Business context and reporting period
This unaudited Form 10-Q covers the quarter and nine months ended September 30, 2011. Lone Pine reports that it is a non-operating shell following the 2008 transfer of its former Australian operating subsidiary. It had no current operations or employees and was seeking a merger or acquisition candidate. Financial amounts below are in U.S. dollars.
Financial results and liquidity
| Metric | Three months ended Sep. 30, 2011 | Three months ended Sep. 30, 2010 | Nine months ended Sep. 30, 2011 | Nine months ended Sep. 30, 2010 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| General and administrative expense | $7,791 | $7,000 | $34,840 | $30,000 |
| Interest expense | $1,790 | $0 | $3,037 | $0 |
| Net loss | $9,581 | $7,000 | $37,877 | $30,000 |
Basic and diluted loss per share was reported as $0.00 for each quarter and $0.01 for each nine-month period (losses; rounded). Weighted-average shares were 2,577,371 in all periods. No margins are meaningful because the company reported no revenue.
At September 30, 2011, cash and total assets were $1,261. Current liabilities totaled $126,090: $40,475 owed to a principal shareholder, $15,615 in accrued expenses, and $70,000 in promissory notes. Stockholders’ deficit was $124,829, and accumulated deficit was $5,043,180. Cash was $1,026 at December 31, 2010.
For the first nine months of 2011, operating activities used $69,765 and financing activities provided $70,000, producing a $235 increase in cash. The comparable 2010 periods used $3,000 in operating activities and received $3,000 in financing. The filing gives no separate cash-flow figures for the quarter alone.
Changes, financing, and outlook
Nine-month net loss increased by $7,877 year over year; quarterly net loss increased by $2,581. The 2011 losses included interest expense on convertible notes, whereas the filing says 2010 losses related almost exclusively to accounting, legal, and transfer-agent fees. Accrued expenses fell from $47,503 at year-end 2010 to $15,615 at September 30, 2011, while $70,000 of promissory notes were added.
Two convertible notes from Heriot Holdings Limited provided $30,000 on March 18, 2011 and $40,000 on May 26, 2011. They carry 10% annual interest and mature on March 18 and May 26, 2012, respectively. If unpaid at maturity, outstanding principal and accrued interest convert into common shares at $0.10 per share.
Management said it expected short-term operating needs to be funded by the principal stockholder and anticipated meeting costs for reporting and acquisition efforts through loans or investment from that shareholder or other investors. The company had no positive operating cash flow. The filing identifies substantial going-concern uncertainty, citing the nine-month loss and accumulated deficit; it provides no assurance that anticipated funding or a transaction will occur. Any acquisition could involve an early-stage or financially unstable business and associated risks. No revenue or earnings guidance was provided.
Other disclosures
Legal fees for the nine months were $17,575, compared with $9,000 in 2010; the filing notes they were incurred by a law firm of which the company’s CEO and president was a partner. Management concluded disclosure controls were adequate and effective and reported no significant changes in internal controls during or since the quarter. Legal proceedings were reported as having no material changes; risk factors were marked “Not applicable.”
Important facts for investors to verify
- Confirm issuer identity: the supplied filing names Lone Pine Holdings, Inc., not Flux Power Holdings, Inc.
- Verify the outstanding convertible notes, accrued interest, conversion terms, and any repayment or conversion after the reporting date.
- Assess whether the company obtained the shareholder or outside financing management expected, given cash of only $1,261 and current liabilities of $126,090.
- Check for subsequent merger or acquisition developments and any related dilution or change in control.
- Review the going-concern uncertainty and the filing’s stated acquisition risks alongside its “Not applicable” risk-factor disclosure.