Filing summary
Entity and period: The supplied filing is a Form 10-Q for Loton, Corp., a Nevada development-stage 3D visualization business, for the three months ended July 31, 2011. This differs from the request metadata, which names Liveone, Inc.; verify the filing’s identity before relying on this summary.
Financial results and liquidity
- Revenue: $0 for the quarter, unchanged from $0 in the comparable 2010 quarter. Revenue since inception was $14,866.
- Loss and expenses: Net loss was $6,147 versus $3,172, a larger loss of $2,975. General and administrative expenses were $6,147 versus $3,172, up about 94%. Basic loss per share was reported as $(0.00).
- Cash flow: Operating cash use was $4,722, compared with $3,172 in the prior-year quarter. No financing cash flow was reported for either quarter. Cash fell from $12,395 at April 30 to $7,673 at July 31.
- Balance sheet: Current assets were $12,862, including $7,673 cash and $5,189 prepaid expenses. Current liabilities were $556, consisting of a non-interest-bearing, unsecured, demand advance from the director; accounts payable were $0. Working capital was $12,306. Stockholders’ equity was $12,306, down from $18,453 at April 30.
- Debt and margins: The filing reports no bank financing or credit lines. The director advance is the disclosed liability; the filing does not provide a gross-margin figure, and a meaningful margin cannot be derived with no quarterly revenue.
Outlook, risks and other disclosures
- Management says existing funds and anticipated financing are expected to cover operations for six months, but also says additional funds will be needed within 12 months to sustain and expand operations.
- Management expects to seek equity financing and possibly short-term director loans; no future loan or equity arrangements are in place. Equity or convertible-debt issuance could dilute shareholders, and acceptable financing may not be available.
- The filing identifies substantial doubt about the company’s ability to continue as a going concern, citing accumulated losses of $20,794 and anticipated further losses. Management’s plan depends on profitable operations and/or obtaining financing.
- Management reported disclosure controls were effective as of July 31, 2011 and no material change in internal control over financial reporting during the quarter. The filing reports no material off-balance-sheet arrangements, known legal proceedings, or subsequent events requiring disclosure.
Facts investors should verify
- Whether this Loton, Corp. filing is the intended filing, given the Liveone, Inc. metadata.
- The cash-flow comparison: the statement reports $3,172 of operating cash use for the three months ended July 31, 2010, while the MD&A appears to refer to the period ended July 31, 2011 for that same amount.
- The assumptions and timing behind management’s six-month funding estimate and stated need to raise funds within 12 months.
- The terms and repayment status of the $556 director advance, which is due on demand.