Business context and reporting period
This is Retrospettiva, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2012. The request metadata names Outdoor Holding Co., which does not match the registrant identified in the filing; verify the issuer and filing association.
Retrospettiva is a development-stage company with no current operations. It previously manufactured and imported textile products, ceased operations in 2001, and now seeks a merger, acquisition, or similar transaction. The filing identifies the company as a shell company.
Financial results and condition
- Revenue: $0 for the quarter, unchanged from the first quarter of 2011.
- Expenses and earnings: Operating expenses were $6,229, versus $1,207 a year earlier. Interest expense was $3,328, versus $2,992. The financial statements report a pretax loss of $9,557, income tax expense of $200, and net loss of $9,757, compared with a net loss of $4,399 in Q1 2011. Basic and diluted loss per share was reported as nil. The MD&A instead describes the 2012 loss as $9,557; this conflicts with the statements’ net-loss figure.
- Margins: Not meaningful because the company had no revenue.
- Cash flow and cash: Operating cash flow was $0 in Q1 2012, compared with $8,911 used in Q1 2011; quarter-end cash was $0. The filing says cash needs were funded by related parties. There was no investing cash flow in either period.
- Liquidity: Current assets were $0 and current liabilities were $238,616 at March 31, 2012, leaving a working-capital deficit of $238,616, up $9,757 from December 31, 2011.
- Liabilities and debt: Current liabilities included $166,874 in stockholder notes, $48,474 accrued interest, $14,534 accounts payable, $6,934 in officer advances, and $1,800 accrued expenses. The stockholder notes are unsecured, bear 8% interest, and are due on demand; one note is convertible at $0.10 per share. The officer advances are unsecured, non-interest-bearing, and due on demand.
- Equity: Stockholders’ deficit was $238,616. The filing reports 14,425,903 common shares outstanding at March 31 and May 1, 2012.
Material changes versus the prior comparable period
- The net loss increased to $9,757 from $4,399, while operating expenses rose to $6,229 from $1,207. The filing attributes expenses to public-company reporting and efforts to revive the company.
- Interest expense increased to $3,328 from $2,992; the MD&A attributes the increase to higher stockholder-note balances.
- Working-capital deficit increased by $9,757 from year-end 2011, as reporting and revival costs were funded through increased liabilities.
Outlook, risks and unusual items
- Management is seeking a transaction with another entity but says it cannot predict when, if ever, its objectives will be achieved. It expects losses to continue until operations generate revenue, if they do.
- The filing states that the absence of operations, negative working capital, and stockholders’ deficit raise substantial doubt about the company’s ability to continue as a going concern. Management plans to continue SEC reporting and seek funding through a private placement; future stockholder funding is not assured.
- A proposed 2010 merger with NewGen BioPharma was terminated because contractual closing conditions were not satisfied.
- Management concluded that disclosure controls and procedures were not effective as of March 31, 2012. No material change in internal control over financial reporting was reported during the quarter.
- Disclosed risks include ability to raise capital, third-party performance, economic conditions, interest rates and inflation, and regulation. The filing reports no legal proceedings.
Important facts for investors to verify
- Confirm that this Retrospettiva, Inc. filing is the intended filing for the company named in the request metadata.
- Reconcile the MD&A’s stated quarterly loss of $9,557 with the financial statements’ net loss of $9,757, which includes $200 of income tax expense.
- Verify the status, repayment terms, and potential conversion or dilution associated with the demand notes and related-party advances.
- Assess the company’s ability to fund reporting costs, complete a transaction, and continue as a going concern given zero assets and cash and substantial current liabilities.
- Consider the disclosed ineffective disclosure controls when evaluating the reliability of reported information.