Business context and reporting period
This filing is for the three months ended March 31, 2015. The filing identifies the registrant as Original Source Entertainment, Inc., a Nevada company that licenses songs for television and music uses—not NeuroOne Medical Technologies Corp. The company reports limited activity and revenue and describes itself as being in the development stage.
Financial performance and position
- Revenue: $113, down from $165 in Q1 2014.
- Expenses and earnings: General and administrative expense was $9,867, versus $4,063. Debt-discount amortization/other expense was $1,829, versus $330 of other expense in Q1 2014. Net loss was $11,583, compared with $4,228; loss per share was less than $0.01 in both periods.
- Margins: The filing does not provide a clear gross-profit or margin figure.
- Cash flow: Operating activities used $19,591, versus $25 in Q1 2014. Financing provided $19,581, including $12,000 of related-party convertible-note proceeds and $7,581 of related-party advances. Investing cash flow was zero. Cash declined by $10 to $195.
- Liquidity and debt: At March 31, cash and total assets were $195; current liabilities were $35,167, including $30,209 in related-party advances and $1,829 of convertible notes, net of discount. Working capital was negative $34,972. Stockholders’ deficit was $34,972.
Material changes versus the prior comparable period
Net loss increased by $7,355, which management attributed primarily to higher general and administrative expense, particularly legal fees. Operating cash use increased substantially; management attributed the 2015 cash outflow in part to paying down accounts payable and accrued liabilities. Financing shifted from none in Q1 2014 to $19,581 in Q1 2015. Revenue remained minimal and decreased year over year.
Outlook, risks, and unusual items
The filing provides no quantitative guidance. Management expects continuing losses and negative operating cash flows and says additional debt or equity financing will be needed; it cannot assure financing will be available on acceptable terms. The company’s losses, negative operating cash flows, and working-capital deficit raise substantial doubt about its ability to continue as a going concern. Related-party advances are unsecured, non-interest-bearing, due on demand, and have no formal commitment for continued support. Convertible notes carry 6% interest after specified interest-free periods and are convertible into shares of the subsidiary. Management reported no material subsequent events in the financial-statement notes; separately, a director resigned effective May 18, 2015, without a reported disagreement. No off-balance-sheet arrangements or pending legal proceedings were reported.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing is for Original Source Entertainment, Inc., despite the request metadata naming NeuroOne Medical Technologies Corp.
- Verify the convertible-note details: the Note A narrative states a $3,255 loan, while the note table lists $3,225 principal; the filing also reports $12,000 of new convertible-note advances.
- Assess funding sufficiency and the going-concern uncertainty, including the lack of a formal commitment for continued related-party support.
- Check the controls disclosure: it refers to an evaluation as of March 31, 2014, while its conclusion states March 31, 2015.