Filing summary
Issuer identity discrepancy: The supplied filing is for Point Capital, Inc. (formerly Gold Swap Inc.), not Silo Pharma, Inc. Investors should verify that this is the intended filing before relying on the information below.
Business context and reporting period
This unaudited Form 10-Q covers the quarter and six months ended June 30, 2013; it was signed August 8, 2013. Point Capital described itself as a development-stage company with no revenue since inception. Its original precious-metals recycling plan had not been executed. Following a January 2013 merger and name change, the company was considering becoming a business development company (BDC), potentially alongside a recycling business in a subsidiary.
Financial results and position
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | None | None |
| General and administrative expense | 2013: $22,477; 2012: $5,668 | 2013: $45,359; 2012: $18,707 |
| Net loss | 2013: $22,477; 2012: $5,668 | 2013: $45,359; 2012: $18,707 |
| Basic and diluted loss per share | $(0.00) in both periods | $(0.00) in both periods |
| Net cash used in operations | $51,597 in the first six months of 2013, versus $15,939 in 2012 |
At June 30, 2013, cash and total assets were $368,682. Current liabilities were $35,235, including $20,000 of notes payable and $1,352 of interest payable. The balance sheet reported stockholders’ equity of $333,447 and no long-term liabilities. The company reported no cash interest or income-tax payments. No meaningful revenue or operating margin was reported.
Financing activities provided $420,000 in the first half of 2013: $400,000 from issuing 4,000 Series A preferred shares to Alpha Capital Anstalt and $20,000 from issuing common shares. The preferred shares are convertible into 2,000,000 common shares. Common shares outstanding were 30,731,200 at June 30 and August 8, 2013.
Changes, outlook, and risks
- Quarterly G&A rose 297% year over year; six-month G&A rose 142%. Management attributed the increases primarily to professional fees related to the Alpha Capital investment and the merger/name change.
- Management estimated next-12-month working-capital needs of $95,000 and a burn rate of about $8,000 per month, and believed available cash would cover working-capital requirements for at least 12 months. It also stated that additional capital might not be available if needed.
- The company said it would elect BDC status and file Form N-54 no later than September 30, 2013, subject to the stated asset-coverage timing. It contemplated investing primarily in loans and, to a lesser extent, selected equity securities. The filing does not establish that the conversion was completed.
- Preferred stock terms include full-ratchet anti-dilution provisions and potential redemption rights. The filing states that if the company elects BDC status and asset coverage is below 200%, it must redeem enough preferred shares to meet the requirement. Other triggering events may also create redemption or dividend rights.
- The filing identifies development-stage business-failure and financing risks. It reports no off-balance-sheet arrangements, no pending material legal proceedings, and no material quarterly change in internal controls.
Important facts to verify
- Confirm issuer and filing identity: the document names Point Capital, Inc., not Silo Pharma, Inc.
- Confirm whether the company elected BDC status by the stated deadline and whether it met applicable asset-coverage requirements.
- Review the preferred-stock certificate and purchase agreement for conversion, voting, anti-dilution, and redemption terms; the filing’s descriptions are not fully consistent.
- Reconcile filing inconsistencies: MD&A gives six-month 2013 net loss as $45,539 once, while the financial statements report $45,359; the balance-sheet comparative date is also inconsistently labeled in the filing text.
- Verify the classification and maturity of notes payable: the notes describe a $15,000 note due February 2014, while the balance-sheet presentation and accompanying note do not clearly reconcile its current versus long-term classification.