Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended October 31, 2010, for Loton, Corp (also referred to as Liveone, Inc. in metadata). The company is a Nevada corporation based in Montreal, Canada, operating as a development-stage entity. Its intended business is providing 3D rendering, animation, and architectural visualization services. As of the reporting date, the company had not commenced commercial operations or generated any revenue.
Key Financial Metrics
| Metric | Value (Oct 31, 2010) | Value (Apr 30, 2010) |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss (6 months) | ($4,235) | N/A |
| Accumulated Deficit | ($4,443) | ($208) |
| Cash and Equivalents | $113 | $3,991 |
| Total Assets | $113 | $3,991 |
| Total Liabilities | $556 | $199 |
| Stockholders' Equity (Deficit) | ($443) | $3,792 |
| Common Shares Outstanding | 4,000,000 | 4,000,000 |
Cash Flow: Net cash used in operating activities for the six months ended October 31, 2010, was $4,235. Net cash provided by financing activities was $357, derived from loans from related parties.
Material Changes
- Liquidity Decline: Cash balances decreased significantly from $3,991 at April 30, 2010, to $113 at October 31, 2010, due to operating losses.
- Equity Position: The company moved from positive stockholders' equity of $3,792 to a deficit of $443 within the six-month period.
- Liabilities: Current liabilities increased from $199 to $556, entirely due to increased advances from related parties (directors).
- Operations: The company remains in the development stage with zero revenue and no change in the weighted average number of shares outstanding during the period.
Outlook, Risks, and Management Commentary
Going Concern: Management explicitly states that the company's ability to continue as a going concern is in substantial doubt due to accumulated losses and the need for profitable operations or additional financing.
Funding Strategy: The company intends to finance operations over the next twelve months using existing cash (which is minimal), loans from directors, or private placements of common stock. No specific agreements for future equity financing are currently in place.
Subsequent Events: Between January and March 2011, the company issued 970,000 shares of common stock at $0.03 per share, raising $29,100. This brings total cash proceeds from inception to $33,100 and total shares sold to 4,970,000.
Risks: The company has no lines of credit or bank financing. If adequate funds are not available on acceptable terms, the company may be unable to sustain operations or pursue business opportunities.
Investor Verification Checklist
- Cash Runway: Verify the current cash balance given the reported $113 balance as of October 2010 and the subsequent equity raise in early 2011.
- Related Party Dependence: Confirm the status of the $556 in non-interest-bearing, unsecured loans from directors and whether additional funding is contingent on these parties.
- Revenue Generation: Assess whether the company has successfully transitioned from a development stage to generating revenue from its intended 3D visualization services.
- Dilution Impact: Review the impact of the subsequent issuance of 970,000 shares (post-reporting period) on existing shareholder ownership.
- Going Concern Status: Evaluate the company's ability to meet obligations without further capital raises, given the explicit "substantial doubt" disclosure.