Filing overview
The supplied filing is a Form 10-Q for Fits My Style, Inc., a Nevada development-stage company—not Rezolute, Inc. It covers the quarter ended December 31, 2011 (the company’s fiscal second quarter, given its June 30 year-end). The interim financial statements are unaudited.
Business context and financial results
The company was developing an interactive website to help consumers visualize furnishings in rooms. It had not generated revenue and described its operations as not yet initiated. In January 2012, after the reporting period, it launched a public website and a proof-of-concept designer site.
- Revenue: None reported.
- Quarterly results: Net loss was $7,998 for the three months ended December 31, 2011, versus $1,751 in the comparable 2010 quarter. General and administrative expense rose to $7,998 from $1,751, primarily due to legal, printing, and audit costs associated with becoming a reporting company. Research and development expense was zero in both quarters.
- Six-month results: Net loss was $15,392 for the six months ended December 31, 2011, compared with $26,751 from inception through December 31, 2010. The periods are not equal in length. Current-period R&D expense was zero, versus $24,500 in the earlier period; general and administrative expense was $15,392 versus $2,251.
- Cash flow: Operating activities used $21,184 in the six months ended December 31, 2011. There were no financing proceeds in that period; cash declined from $37,030 at June 30, 2011 to $15,846 at December 31, 2011.
- Liquidity and debt: Cash and current assets were $15,846; accounts payable and current liabilities were $5,865, yielding positive working capital of $9,981. The filing reports no debt. No interest or taxes were paid.
- Equity: Stockholders’ equity was $9,981, down from $25,373 at June 30, 2011, reflecting the period’s loss. The company reported 3,836,000 shares outstanding as of February 8, 2012.
Margins are not meaningful because the company had no revenue.
Outlook, risks, and notable items
- Management said existing cash and expected operating cash flows would not sustain operations for more than six months. It estimated a need for approximately $40,000 to fund expenses over the next 12 months and an additional $100,000 to develop a more advanced proof-of-concept service.
- Management planned to seek equity financing, but disclosed no financing arrangements and cautioned that capital might not be available. The filing states that failure to raise funds could severely affect the company’s ability to remain viable.
- Development of a beta version was expected to take approximately 12–18 months after the company raised the required capital and hired staff; this was a plan, not a commitment or assurance.
- The financial statements disclose substantial doubt about the company’s ability to continue as a going concern. They were prepared on a going-concern basis and do not include adjustments that might be required if the company could not continue.
- Management concluded disclosure controls were ineffective due to a material weakness involving inadequate segregation of duties and the need for a stronger internal-control environment, attributed to the company’s small staff.
- The company had not yet obtained a stock-market or quotation-system listing; it said a market maker had agreed to seek OTC Bulletin Board quotation eligibility.
Investor verification points
- Verify the issuer and filing: the provided text identifies Fits My Style, Inc., not Rezolute, Inc.
- Confirm the intended reporting period: the filing is for the quarter ended December 31, 2011, and the company’s fiscal year ended June 30.
- Assess cash runway, unpaid obligations, and the feasibility and dilution implications of the proposed equity financing.
- Check progress and costs for the website and planned beta development, including whether the January 2012 launch led to partnerships or revenue.
- Review subsequent filings for changes in going-concern status, internal controls, and trading/quotation status.