SEC Filing Summary: Sport Endurance, Inc. (10-Q)
Business Context and Reporting Period
Company: Sport Endurance, Inc. (formerly Cayenne Construction, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: February 28, 2010
Status: Development Stage Company
Business Overview: The Company intends to manufacture and distribute sports energy drinks and gel capsules. It ceased operations in 2002 and was revived in August 2009. As of the reporting date, the Company has no operating revenues and is in the pre-revenue development stage.
Key Financial Metrics
| Metric | Three Months Ended Feb 28, 2010 | Six Months Ended Feb 28, 2010 | Balance Sheet (Feb 28, 2010) |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(6,749) | $(16,361) | N/A |
| Cash and Equivalents | N/A | N/A | $170 |
| Total Assets | N/A | N/A | $25,409 |
| Total Liabilities | N/A | N/A | $4,135 |
| Working Capital | N/A | N/A | $(1,970) |
| Accumulated Deficit | N/A | N/A | $(157,561) |
Note: The filing does not provide margin data as there is no revenue. Debt consists solely of accounts payable ($4,135); no long-term debt is reported.
Material Changes vs. Prior Period
- Operations: The Company had no operations, revenues, or expenses for the three and six months ended February 28, 2009. The current period reflects the revival of the entity and the incurrence of initial operating costs.
- Expenses: Total operating expenses for the six months ended Feb 28, 2010, were $16,361, compared to $0 in the prior year. This includes $12,000 in professional fees (legal/accounting for SEC filings) and $2,265 in general and administrative expenses (rent, bank fees).
- Liquidity: Cash decreased from $3,200 at August 31, 2009, to $170 at February 28, 2010, due to operating cash outflows of $10,325 partially offset by $7,295 in financing proceeds from stock subscriptions.
Outlook, Risks, and Management Commentary
- Going Concern: Management explicitly states that the Company's poor financial condition, recurring losses, and working capital deficit raise substantial doubt about its ability to continue as a going concern. Continued operations are dependent on securing additional equity or debt financing.
- Capital Requirements: The Company estimates it needs at least $75,000 to implement its direct sales model, $10,000 for strategic relationships with convenience stores, $3,000 for software/hardware, and $30,000 for working capital. Manufacturing costs for initial product runs are estimated at $17,000.
- Internal Controls: Management concluded that disclosure controls and procedures are not effective due to a lack of an independent board, lack of segregation of duties, and reliance on a single financial consultant.
- Key Personnel Risk: The Company is heavily reliant on Robert Timothy, who serves as CEO, President, Secretary, Treasurer, and Sole Director. There is no key man insurance.
- Subsequent Event: On April 19, 2010, the Company received $1,685 in proceeds from a common stock subscription receivable.
Investor Verification Checklist
- Capital Sufficiency: Verify if the Company has secured the estimated $125,000+ in funding required to launch operations, given the current cash balance of only $170.
- Related Party Transactions: Review the commercial lease agreement with the CEO (Robert Timothy) and DeVon Timothy, which commenced February 1, 2010, at $2,135/month.
- Stock Dilution: Confirm the status of the 1,685,000 shares of common stock subscription receivable and potential future issuances to raise capital.
- Product Development: Assess the timeline for manufacturing and distribution of the "8 hour Energy Gel Caps" and energy drinks, as no product has been sold to date.
- Regulatory Compliance: Monitor the Company's ability to maintain public company status given the identified material weaknesses in internal controls and the "penny stock" status of its shares.