Business context and reporting period
This is Retrospettiva, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2011. The request identifies Outdoor Holding Co, but the filing names Retrospettiva, Inc.; verify that this is the intended filing. Retrospettiva is a development-stage, shell company with no current operations. It previously manufactured and imported textiles, ceased operations in 2001, and now seeks a merger or acquisition candidate.
Financial results and condition
- Revenue: None in the third quarter or first nine months of 2011 or the comparable 2010 periods.
- Profit/loss: Third-quarter net loss was $3,641 versus $6,350 in 2010. Nine-month net loss was $19,594 versus $26,646. Reported loss per share was nil in both comparisons.
- Expenses and interest: Nine-month operating expenses were reported as $9,496 in the financial statements and $9,497 in MD&A, versus $17,617 in 2010. Nine-month interest expense was $9,497 versus $8,429. For the quarter, the statements show total expenses of $142, while MD&A reports $342; the filing text does not reconcile this discrepancy.
- Cash flow: Operating cash use was $14,370 in the first nine months of 2011 versus $16,668 in 2010, funded by related parties. Financing provided $14,369. The cash-flow statement shows ending cash of negative $1, while the balance sheet reports no assets; the filing does not clarify this presentation.
- Liquidity and debt: The balance sheet reports no current assets and current liabilities of $222,209, including $166,049 in stockholder notes, $41,805 in accrued stockholder interest, and $6,934 in officer advances. MD&A gives current liabilities and working-capital deficit as $222,210. Stockholders’ deficit was $222,209.
- Margins: Not meaningful because the company reported no revenue.
Changes versus prior comparable periods
The nine-month net loss narrowed by $7,052 from 2010, while operating expenses declined and interest expense increased. The working-capital deficit increased from $202,616 at December 31, 2010 to approximately $222,210 at September 30, 2011, as costs were funded through increased liabilities. Stockholder-note principal increased during the period.
Outlook, risks, and unusual items
- Management intends to identify and complete a merger, acquisition, or similar transaction, but says it cannot predict when or whether its objectives will be achieved. The proposed 2010 merger with NewGen BioPharma was terminated because contractual closing conditions were not met.
- Management expects losses to continue unless the company begins generating revenue. It says additional funding is needed, conventional debt financing is unlikely, and future stockholder funding is not assured.
- The filing states that no operations, negative working capital, and a stockholders’ deficit raise substantial doubt about the company’s ability to continue as a going concern. Management plans to seek private-placement funding.
- Stockholder notes are unsecured, bear 8% interest, and are due on demand; one is convertible into restricted common stock at $0.10 per share. Officer advances are unsecured, non-interest-bearing, and due on demand.
- Management concluded disclosure controls and procedures were not effective as of September 30, 2011. No material change in internal control over financial reporting during the quarter was reported.
- The filing reports no legal proceedings. It records a cumulative $137,310 gain from a prior litigation settlement during the development period, but no such gain in the current or comparable nine-month periods.
Important facts for investors to verify
- Confirm the registrant identity: the filing is for Retrospettiva, Inc., not Outdoor Holding Co.
- Reconcile the conflicting third-quarter expense figures and nine-month operating-expense figures between the financial statements and MD&A.
- Confirm the reported current-liability/working-capital amount and the cash-flow statement’s negative $1 ending cash against the balance sheet.
- Assess the going-concern uncertainty, demand repayment terms on related-party debt, and the availability of additional funding.
- Review the ineffective disclosure-controls conclusion and the status of any prospective merger or acquisition.