Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2009, for Saguaro Resources, Inc. (Note: The request metadata listed "Inspiremd, Inc.", but the filing text identifies the registrant as Saguaro Resources, Inc.). The company is a development-stage enterprise incorporated in Delaware with principal offices in the United Kingdom. Its primary business is the acquisition and exploration of mining properties, specifically the Sky 1-4 Mineral Claims in Nevada. The company has generated no revenues to date and is classified as a shell company and a smaller reporting company.
Key Financial Metrics
| Metric | Three Months Ended Dec 31, 2009 | Six Months Ended Dec 31, 2009 | Inception to Dec 31, 2009 |
|---|---|---|---|
| Revenues | $0 | $0 | $0 |
| Net Loss | $(2,680) | $(9,275) | $(20,100) |
| Cash Balance (Ending) | $645 | $645 | $645 |
| Total Assets | $645 | $645 | $645 |
| Total Liabilities | $8,245 | $8,245 | $8,245 |
| Stockholders' Equity | $(7,600) | $(7,600) | $(7,600) |
| Shares Outstanding | 2,500,000 | 2,500,000 | 2,500,000 |
Liquidity and Debt: The company holds minimal cash ($645) and has significant liabilities ($8,245) consisting entirely of advances from the sole officer and director. There are no accounts payable or accrued liabilities listed.
Material Changes vs. Prior Period
- Revenue: Remained at $0, consistent with the prior quarter and year-to-date periods.
- Expenses: General and administrative expenses increased to $2,680 for the quarter ended December 31, 2009, compared to $0 for the same period in 2008.
- Liabilities: Advances from officers increased from $3,250 (as of June 30, 2009) to $8,245 (as of December 31, 2009), reflecting additional funding provided by management to sustain operations.
- Equity: Accumulated deficit grew from $(10,825) to $(20,100) due to continued operating losses.
Outlook, Risks, and Management Commentary
Going Concern: The filing explicitly states there is substantial doubt about the company's ability to continue as a going concern. The company has insufficient revenues to meet operating expenses and requires additional capital to continue operations.
Subsequent Event (Financing): On January 11, 2010, subsequent to the reporting period, the company completed an S-1 offering, issuing 2,000,000 shares at $0.01 per share to raise $20,000. This capital is intended to fund the first phase of exploration and administrative costs.
Plan of Operation: Management plans to use the raised funds for geological mapping, soil sampling, and rock sampling (Phase 1) on the Sky Property, estimated to cost $8,500. Additional funds are allocated for professional fees and administrative costs. No assurance is given that commercially exploitable mineral resources exist.
Internal Controls: Management identified material weaknesses in internal controls, including a lack of a functioning audit committee, inadequate segregation of duties, and ineffective period-end reporting controls. Remediation plans include appointing outside directors and segregating duties, contingent on available funds.
Risks: The company faces risks related to its lack of operating history, the uncertainty of discovering mineral deposits, and the inability to raise further capital if the initial offering funds are exhausted before commercial viability is established.
Investor Verification Checklist
- Verify the status of the $20,000 raised in the January 2010 S-1 offering and whether it has been deposited.
- Confirm the repayment terms and interest status of the $8,245 owed to the sole officer/director.
- Assess the timeline and budget for Phase 1 exploration to ensure the $20,000 raised is sufficient to complete the work.
- Review the geological evaluation report by Mr. James W. McLeod to understand the specific mineralization potential of the Sky Property.
- Monitor the appointment of outside directors to address the identified material weaknesses in internal controls.