Business Context and Reporting Period
The filing is a Form 10-K for Putnam Hills Corp., not Lunai Bioworks Inc. It covers the fiscal year ended March 31, 2012, with comparative information for the period from inception on January 18, 2011 through March 31, 2011. The filing does not clearly correspond to “2011 Q4.” Putnam Hills was incorporated in Delaware in January 2011 and remains a development-stage blank-check and shell company formed to identify and complete a business combination. It has no operating business, employees, listed market, or definitive acquisition agreement.
Financial Metrics
| Metric | Year ended March 31, 2012 | Comparable period |
|---|---|---|
| Revenue | $0 | $0 |
| Net loss | $29,945 | $8,735 |
| Operating cash flow | $(24,945) | $0 |
| Investing cash flow | $(13,219) | $0 |
| Financing cash flow | $38,500 | $0 |
| Cash at period end | $336 | $0 |
| Total assets | $13,555 | $0 |
| Current liabilities | $27,235 | $8,735 |
| Stockholders’ deficiency | $(13,680) | $(8,735) |
The 2012 loss consisted primarily of legal, accounting, audit, and other professional fees. No meaningful revenue, gross margin, operating margin, or earnings-based profitability was reported. The company had $13,219 of loans receivable from related parties and $27,235 of related-party debt, including a $5,000 note bearing interest at 6% and payable upon completion of a qualifying business combination. No dividends were declared or paid.
Material Changes Versus the Prior Comparable Period
- Assets increased from zero to $13,555, consisting of $336 in cash and $13,219 in related-party loans receivable.
- Current liabilities increased from $8,735 to $27,235, primarily from additional related-party advances and a $5,000 note payable.
- Net loss increased to $29,945 from $8,735 as the company incurred additional professional and reporting costs.
- Financing provided $38,500 during fiscal 2012, including $25,000 from the common-stock subscription and $13,500 of related-party debt financing.
- The company made $13,219 of unsecured, non-interest-bearing loans to two entities affiliated with its sole stockholder.
- Ownership remained concentrated: 5,000,000 common shares were outstanding as of July 16, 2012, and the sole stockholder controlled 100% of the outstanding shares.
Guidance, Outlook, Risks, and Unusual Items
Management plans to continue searching for a target business and expects to fund reporting and acquisition-related costs through existing cash, fee deferrals, related-party advances, and additional equity or other financing. No target, transaction, timeline, or definitive agreement has been identified. Management expects that any transaction could result in substantial dilution and a change in control, potentially without a stockholder vote.
- The independent auditor stated that substantial doubt exists regarding the company’s ability to continue as a going concern. Management’s plans depend on finding a suitable acquisition, raising capital, and obtaining additional related-party loans.
- The company had approximately $14,000 of negative working capital and only $336 of cash at March 31, 2012. There is no assurance that additional funding will be available.
- The company is dependent on related parties for financing and professional-fee payments. Subsequent to year-end, it received $11,000 from Sunrise Financial Group for professional fees.
- Due to limited resources and management’s limited time commitment, due diligence on a potential target may be incomplete. The company also faces competition from better-capitalized shell companies and acquisition vehicles.
- The company has no operating revenue and may never complete a business combination. Any transaction may involve a financially unstable or early-stage target and substantial dilution of existing holders.
- Management reported effective disclosure controls and internal control over financial reporting, but the filing states that no auditor attestation was required during the applicable transition period.
Important Facts for Investors to Verify
- Confirm the issuer identity: the supplied filing names Putnam Hills Corp., while the request metadata names Lunai Bioworks Inc.
- Confirm the relevant reporting period because the filing covers the fiscal year ended March 31, 2012 rather than a clearly identified 2011 fourth quarter.
- Review the going-concern qualification, negative working capital, limited cash, and dependence on additional financing.
- Verify the terms, collectability, and related-party nature of the $13,219 loans receivable and $27,235 of related-party liabilities.
- Assess ownership concentration, potential dilution, and the control consequences of any future reverse merger or business combination.
- Confirm whether a target, merger agreement, financing arrangement, or other material transaction was entered into after the filing date; the filing reports none as of its filing date.