Business context and reporting period
The supplied filing is for Fits My Style, Inc., a development-stage company incorporated in Nevada and based in Israel—not Rezolute, Inc. It is a Form 10-Q for the quarter ended March 31, 2012 (the third quarter of its fiscal year ending June 30, 2012), filed as an unaudited interim report. The company is developing an online service for visualizing furnishings in rooms; it reported no operating revenue. It launched a public website and proof-of-concept service in January 2012.
Financial results and liquidity
| Metric | Period / amount |
|---|---|
| Revenue | None reported since inception. |
| Net loss | $9,945 for the three months ended March 31, 2012, versus $24,407 in the comparable 2011 quarter. For the nine months ended March 31, 2012, loss was $25,337; the filing compares this with $26,745 from inception through March 31, 2011. |
| Operating expenses | $9,945 for the 2012 quarter and $25,337 for the 2012 nine-month period. Nine-month G&A was $23,997; website development costs were $1,340. |
| Cash and assets | At March 31, 2012, cash was $6,943 and total assets were $8,888, including $1,945 in net website development costs. |
| Cash flow | For the nine months ended March 31, 2012, operating cash use was $28,087 and investing cash use was $2,000; there were no financing proceeds in the period. |
| Liabilities and equity | Current liabilities, all reported as accounts payable, were $8,852. Stockholders’ equity was $36; accumulated development-stage deficit was $67,264. No debt balance is reported. |
Margins are not meaningful because the company had no revenue. Basic and diluted loss per share was reported as $0.00 for the 2012 quarter and $0.01 for the nine-month period, rounded to the nearest cent.
Material changes versus comparable periods
- Quarterly net loss narrowed from $24,407 to $9,945, principally because the prior-year quarter included $23,924 of research and development expense; current-quarter G&A rose to $8,605 from $483.
- Nine-month G&A increased to $23,997 from $2,245 for the comparable inception-to-date period, reflecting reporting-company, professional, and OTC quotation costs. The periods are not equivalent in length, so the comparison is limited.
- Cash fell from $37,030 at June 30, 2011 to $6,943 at March 31, 2012. The company capitalized $2,000 of website development costs paid to a company controlled by its president, treasurer, and director.
Outlook, risks, and unusual items
- Management said it needs approximately $40,000 for expenses over the next 12 months and an additional $100,000 to develop a more complete proof-of-concept service. It had no financing agreements or arrangements and said additional capital may not be available.
- The planned beta version would require hiring in-house development staff and, after financing and hiring, was estimated to take 12–18 months. There is no assurance that the company can raise the necessary funds.
- The filing identifies substantial doubt about the company’s ability to continue as a going concern. The financial-statement note says current resources are not expected to sustain operations for more than one year, while MD&A says they are insufficient for more than six months; the filing does not reconcile these estimates.
- The filing’s assertion of positive working capital conflicts with the balance sheet: current assets of $6,943 less current liabilities of $8,852 imply a $1,909 working-capital deficit.
- On April 2, 2012, after quarter-end, the company issued 90,000 shares for consulting services, valued at $4,500. The filing reports 3,926,000 shares outstanding as of May 14, 2012.
- Management concluded that disclosure controls were ineffective due to a material weakness involving lack of segregation of duties and the need for a stronger internal-control environment. No legal proceedings or off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Confirm issuer and period: this text identifies Fits My Style, Inc. and a quarter ended March 31, 2012, not Rezolute, Inc. or 2011 Q3.
- Reconcile the conflicting working-capital and cash-runway disclosures.
- Verify available cash, near-term payables, and whether new financing was obtained to fund operations and product development.
- Assess the related-party website-development arrangement and the company’s ability to address its disclosed material weakness in controls.