SEC Filing Summary: Rub Music Enterprises, Inc. (10-Q)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2008, for Rub Music Enterprises, Inc. (Note: The input metadata referenced "SANUWAVE Health, Inc.", but the filing text explicitly identifies the registrant as Rub Music Enterprises, Inc.). The company is classified as a development stage company and a shell company. Its original business of producing and marketing musical pieces ceased at the end of 2006. The company is currently seeking a business opportunity, specifically looking to merge with or acquire a target company to become a public reporting entity.
Key Financial Metrics
| Metric | Three Months Ended Sep 30, 2008 | Nine Months Ended Sep 30, 2008 | As of Sep 30, 2008 |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(8,079) | $(24,976) | N/A |
| Cash Balance | N/A | N/A | $3,316 |
| Total Assets | N/A | N/A | $3,316 |
| Total Current Liabilities | N/A | N/A | $74,713 |
| Working Capital | N/A | N/A | $(71,397) |
| Debt (Related Party Note) | N/A | N/A | $40,000 |
| Stockholders' Deficit | N/A | N/A | $(71,397) |
Expense Breakdown (Nine Months 2008): General and Administrative expenses were $23,848, Interest expense was $1,028, and Income Tax expense was $100.
Material Changes vs. Prior Period
- Operating Expenses: General and administrative expenses increased significantly to $23,848 for the nine months ended September 30, 2008, compared to $6,942 in the same period in 2007. This increase is attributed to higher legal and accounting fees related to filing a registration statement.
- Interest Expense: Interest expense rose to $1,028 for the nine months ended September 30, 2008, compared to $35 in the prior year period, due to a new related-party note.
- Liquidity: Cash decreased from $5,149 at December 31, 2007, to $3,316 at September 30, 2008. Net cash used in operating activities increased to $41,833 (nine months 2008) from $18,251 (nine months 2007).
- Debt Structure: The company incurred a new $40,000 note payable to its CEO during the period, which was not present in the prior year.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's current liabilities exceed current assets and it has a stockholders' deficit. These factors raise substantial doubt about the company's ability to continue as a going concern.
- Capital Needs: The company has no revenue source and will require additional capital from the sale of common stock, debt, or other sources to meet obligations. There is no assurance that such capital will be raised.
- Strategy: Management is focused on locating and negotiating with a target company for a merger or asset contribution to transition into an operating public company.
- Risks: No material changes to risk factors were reported since the previous 10-K. The primary risk remains the inability to secure financing or a merger target.
- Related Party Transactions: Significant liabilities are owed to related parties, including $21,776 in accounts payable to a former CEO and a $40,000 demand note to the current CEO bearing 8% interest.
Investor Verification Checklist
- Identity Discrepancy: Verify why the metadata referenced "SANUWAVE Health, Inc." while the filing is for "Rub Music Enterprises, Inc."
- Going Concern Status: Confirm the company's ability to raise the necessary capital to cover the $71,397 working capital deficiency.
- Merger Progress: Investigate if any specific target companies have been identified for the proposed merger or reverse acquisition.
- Related Party Debt: Review the terms of the $40,000 note payable to the CEO, specifically the "payable on demand" clause and potential dilution if converted to equity.
- Shell Company Status: Confirm the implications of the company's status as a shell company with no active operations.