SEC Filing Summary: Rub Music Enterprises, Inc. (10-Q)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2008, for Rub Music Enterprises, Inc. (the "Company"). The Company is classified as a development stage company and a shell company. Its original business of producing and marketing musical pieces has ceased. The Company is currently seeking a business opportunity, specifically looking to merge with or acquire a target company to become a public reporting entity. As of August 14, 2008, there were 40,700,000 shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2008 | Six Months Ended June 30, 2008 | Cumulative (Development Stage) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(15,098) | $(16,897) | $(52,589) |
| General & Administrative Expenses | $14,782 | $16,581 | $50,638 |
| Cash Balance (End of Period) | $6,829 | $6,829 | $6,829 |
| Total Current Liabilities | $70,147 | $70,147 | $70,147 |
| Working Capital Deficiency | $(63,318) | $(63,318) | $(63,318) |
| Net Cash Used in Operating Activities | N/A | $(28,320) | $(50,392) |
| Net Cash Provided by Financing Activities | N/A | $30,000 | $27,000 |
Material Changes vs. Prior Period
- Expenses: General and administrative expenses increased significantly to $14,782 for the three months ended June 30, 2008, compared to $1,005 in the same period in 2007. This increase is attributed to legal and accounting fees related to the filing of a registration statement.
- Debt: The Company incurred a new $30,000 note payable to its CEO during the six-month period ended June 30, 2008. This note is unsecured, payable on demand, and bears 8% annual interest.
- Cash Flow: Net cash used in operating activities increased to $28,320 for the six months ended June 30, 2008, compared to $15,381 in the prior year period. This was partially offset by the $30,000 financing proceeds from the related party note.
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 or other sources to meet obligations. There is no assurance that such capital can be raised.
- Strategy: Management is focused on locating a target company for a merger or asset contribution to transition the Company into an operating public entity.
- Risks: No material changes to risk factors were reported since the previous 10-K. The primary risk remains the lack of operations and the need for external financing.
Investor Verification Checklist
- Verify the status of the $30,000 related-party note payable to the CEO and its repayment terms.
- Confirm the Company's progress in identifying a merger target or business opportunity.
- Assess the adequacy of the $6,829 cash balance against the $70,147 in current liabilities.
- Review the specific legal and accounting fees driving the increase in operating expenses.
- Check for any subsequent filings regarding the sale of equity to raise necessary capital.