PSIX

Business Context and Reporting Period

Company: Format, Inc. (d/b/a Power Solutions International, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 2009
Business Description: The Company provides EDGARizing services (preparing and filing SEC documents) to commercial and corporate entities in the United States, Canada, and China. The Company is a smaller reporting company incorporated in Nevada.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue: For the three months ended September 30, 2009, revenue increased to $27,186 from $23,382 in the prior year period, driven by a new service agreement with Research Data Group, Inc. (RDG). However, for the nine-month period, revenue decreased to $69,952 from $85,600 in 2008 due to lower overall workload.
• Expenses: Total operating expenses decreased for both the three-month and nine-month periods compared to 2008. The nine-month decrease was primarily due to lower professional fees and general administrative expenses, which were higher in 2008 due to costs associated with becoming a public company.
• Net Loss: The net loss narrowed significantly for the three months ended September 30, 2009 ($1,276) compared to the prior year ($7,228). For the nine months, the loss decreased slightly to $17,834 from $20,058.
• Liquidity: Cash balances increased from $2,169 at December 31, 2008, to $37,867 at September 30, 2009. This increase was funded by advances from the Company's President and positive cash flow from operations.

Outlook, Risks, and Management Commentary

• Going Concern: The filing contains a substantial doubt about the Company's ability to continue as a going concern. The Company has an accumulated deficit of $245,244 and a working capital deficit of $209,749. Continued operations depend on the President's willingness to fund cash shortages and the success of aggressive marketing strategies.
• Customer Concentration: The Company is highly dependent on a single customer, Research Data Group, Inc. (RDG), which accounted for 99% of revenue in the three months ended September 30, 2009, and 39% for the nine-month period.
• Related Party Dependence: The Company relies heavily on advances from its President, Ryan Neely. As of September 30, 2009, the amount due to the related party was $167,977. Additionally, $7,500 in officer compensation is accrued and unpaid.
• Future Funding: Management estimates current cash ($37,867) is insufficient to fund operations for the next twelve months. The Company intends to pursue public or private financing and further borrowings from officers/directors if a shortfall occurs.
• Plan of Operation: The Company plans to increase its client base through referrals from accountants and attorneys and by fulfilling the bulk EDGARizing services contract with RDG.

Investor Verification Checklist

• Going Concern Status: Verify the Company's ability to secure additional funding beyond the President's personal advances to sustain operations.
• Customer Concentration Risk: Assess the stability of the contract with Research Data Group, Inc., which represents nearly all recent quarterly revenue.
• Related Party Liabilities: Review the terms and repayment likelihood of the $167,977 owed to the President and the $7,500 in accrued compensation.
• Accounts Receivable Quality: Note the significant allowance for doubtful accounts ($26,341) and the full write-off of a $20,500 loan receivable due to uncertain collectibility.
• Capital Adequacy: Confirm if the Company has secured the additional financing required to meet the estimated operating costs for the next 12 months.