SEC Filing Summary: Sport Endurance, Inc. (10-K)
Business Context and Reporting Period
Company: Sport Endurance, Inc. (formerly Cayenne Construction, Inc.)
Filing Type: Form 10-K (Annual Report)
Period Ended: August 31, 2011
Business Stage: Development Stage / Startup
Operations: The Company intends to manufacture and distribute sports energy drinks and soft-gel capsules ("Sport Endurance 8-hour Energy Soft-Gels"). As of the reporting date, the Company has not commenced major operations, has no customers, and has generated no revenue. The Company was dormant from 2002 until July 2009, when it was revived to enter the energy market.
Key Financial Metrics
| Metric | Year Ended Aug 31, 2011 | Year Ended Aug 31, 2011 (Inception) |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(40,847) | $(220,468) |
| Accumulated Deficit | $(220,468) | $(220,468) |
| Cash and Cash Equivalents | $37 | N/A |
| Working Capital (Deficit) | $(56,904) | N/A |
| Total Current Liabilities | $56,941 | N/A |
| Related Party Debt | $25,799 (Principal) + $1,859 (Interest) | N/A |
Note: The filing does not provide specific margin or cash flow from operations data beyond the net loss and working capital deficit figures.
Material Changes vs. Prior Period
- Net Loss Increase: Net loss increased by $2,426 (from $(38,421) in 2010 to $(40,847) in 2011). This was primarily driven by increased interest expense on related party loans ($1,616 vs. $243) and higher professional fees ($22,125 vs. $18,500).
- Working Capital Deterioration: The working capital deficit widened significantly from $(20,249) in 2010 to $(56,904) in 2011 due to increased current liabilities.
- Related Party Borrowing: The Company received $18,359 in unsecured loans from related parties during the 2011 fiscal year, increasing total debt due to related parties from $7,440 to $25,799.
- Management Changes: Robert Timothy resigned as CEO in December 2010; Gerald Ricks was appointed CEO and Chairman of the Board. Vincent Kelly was appointed CFO, Secretary, and Treasurer in December 2010.
Outlook, Risks, and Contingencies
- Going Concern: Independent auditors have issued a "Going Concern" opinion. The Company has insufficient working capital to fund operations for the next 12 months. Continued operations are dependent on raising additional capital through equity or debt financing.
- Capital Requirements: Management estimates a need for at least $75,000 to commence operations, covering marketing ($15,000), strategic relationships ($10,000), software/hardware ($3,000), working capital ($30,000), and initial manufacturing ($17,000).
- Revenue Generation: The Company has no operating history and no revenue. Manufacturing of the energy soft-gels will not occur until a purchase order is received from an end user.
- Internal Controls: Management identified material weaknesses in internal controls, including a lack of effective controls over the control environment and financial statement disclosure. The Board has no independent members.
- Stock Liquidity: Common stock trades on the OTCBB (Symbol: SENZ.OB) and is subject to "penny stock" rules, which may restrict marketability. There is no assurance a public market will develop or be sustained.
Investor Verification Checklist
- Capital Sufficiency: Verify if the Company has secured the estimated $75,000 required to begin manufacturing and marketing operations.
- Related Party Dependence: Assess the risk of reliance on loans from the CEO and major shareholders (BK Consulting) to fund ongoing losses.
- Product Viability: Confirm if any purchase orders have been received for the "Sport Endurance 8-hour Energy Soft-Gels" to trigger manufacturing.
- Internal Controls: Review subsequent filings for remediation of the material weaknesses in internal controls over financial reporting.
- Stock Ownership: Note that a single entity (BK Consulting Inc.) beneficially owns 36.05% of the common stock.