SEC Filing Summary: Excaliber Enterprises, Ltd. (10-Q)
Business Context and Reporting Period
This is a Quarterly Report on Form 10-Q for the period ended June 30, 2010. The registrant is Excaliber Enterprises, Ltd., a Nevada corporation and "Development Stage Company" incorporated in October 2005. The company's stated business is selling specialty gift baskets to health care professionals, organizations, patients, and real estate agents. As of the reporting date, the company has generated no revenue since inception and is classified as a shell company and a smaller reporting company.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2010 | Six Months Ended June 30, 2009 | Cumulative (Inception to June 30, 2010) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Total Expenses | $4,881 | $19,268 | $53,450 |
| Net Loss | $(4,911) | $(19,298) | $(53,570) |
| Cash Balance (Ending) | $1,889 | $1,542 | N/A |
| Total Assets | $2,495 | N/A | N/A |
| Total Liabilities | $1,530 | N/A | N/A |
| Stockholders' Equity | $965 | N/A | N/A |
Debt and Liquidity: Current liabilities include $1,000 in accounts payable, $500 in notes payable to a related party, and $30 in notes payable to a third party. The company has a $20,000 revolving line of credit secured in August 2009, but $0 has been drawn as of June 30, 2010.
Material Changes vs. Prior Period
- Expense Reduction: Total expenses for the six months ended June 30, 2010 ($4,881) decreased significantly compared to the same period in 2009 ($19,268). This reduction is primarily due to a decrease in general and administrative expenses ($4,667 vs. $19,054).
- Equity Position: Stockholders' equity improved from a deficit of $(124) at December 31, 2009, to a positive balance of $965 at June 30, 2010, driven by donated capital and stock issuances.
- Cash Flow: Net cash used in operating activities was $(4,697) for the six months ended June 30, 2010, compared to $(20,270) in the prior year period. Financing activities provided $6,030 in cash, largely from donated capital ($6,000).
Outlook, Risks, and Management Commentary
Going Concern: The filing explicitly states that the company's ability to continue as a going concern is in substantial doubt. Management believes current cash ($1,889) is insufficient to maintain operations for the next 12 months. Continued operations depend on securing additional equity or debt financing.
Plan of Operation: Management intends to utilize the $20,000 line of credit to:
- Improve the company website with e-commerce functionality (budgeted up to $6,000).
- Implement web advertising campaigns (budgeted up to $10,000).
- Pursue direct sales efforts (budgeted up to $2,000).
Risks and Controls:
- Internal Controls: Management identified a material weakness in internal controls due to inadequate staffing and lack of segregation of duties.
- Related Party Transactions: Significant reliance on officers and directors for donated capital, office space, and services. Conflicts of interest may arise as officers are involved in other business activities.
- Market Conditions: The company attributes recent inquiries to a recovering economy but notes no assurance that these will convert to sales.
Investor Verification Checklist
- Revenue Generation: Verify if the planned e-commerce website launch has occurred and if any revenue has been generated since June 30, 2010.
- Financing Status: Confirm whether the company has drawn on the $20,000 line of credit or secured new equity financing to address the liquidity shortfall.
- Related Party Dependence: Assess the extent of continued reliance on officers/directors for capital injections and free office space.
- Internal Controls: Determine if the material weakness in internal controls has been remediated.
- Liability Status: Verify the status of the $1,000 accounts payable and the $530 in notes payable, which are due on demand.