Filing summary
Important identity discrepancy: The request identifies NeuroOne Medical Technologies Corp., but the supplied Form 10-Q is for Original Source Entertainment, Inc., a Nevada development-stage company. The filing reports the quarter ended March 31, 2013. Verify the issuer and filing before relying on these figures.
Business context and reporting period
Original Source says it plans to license songs for use in television shows and movies. The unaudited filing covers the three months ended March 31, 2013, with results compared with the same 2012 quarter.
Financial performance and liquidity
- Revenue was $406, up from $147 in Q1 2012. Cost of sales was zero, so reported gross profit was $406.
- General and administrative expense was $3,391, down from $5,666; interest expense rose to $323 from $55. Net loss narrowed to $3,308 from $5,574. Basic and diluted loss per share was reported as $0.00.
- Operating cash use was $2,985. Financing provided $7,000: $4,000 in note borrowings and $3,000 in paid-in capital. Cash increased by $4,015 to $5,133; there was no investing activity.
- At March 31, current assets were $5,133 and current liabilities were $22,678, a working-capital deficit of $17,545. Current notes payable were $21,000; related-party payables were $952 and accrued interest was $726.
- Total liabilities were $22,678 and stockholders’ equity was negative $17,545. The company reported 5,073,000 common shares outstanding.
Changes, outlook, and risks
Compared with Q1 2012, revenue increased by $259 and G&A expense fell by $2,275, while interest expense increased by $268; the net loss improved by $2,266. Management attributed expense-reduction efforts to limited revenue.
Management said losses and negative operating cash flows are expected to continue for the foreseeable future and that additional debt or equity financing will be needed. It said financing may not be available on acceptable terms and that there is substantial doubt about the company’s ability to continue as a going concern. No specific financial guidance was provided. The filing reports no material capital expenditure commitments, off-balance-sheet arrangements, contractual obligations, or legal proceedings.
Management stated that disclosure controls were effective as of March 31, 2013, and that there were no material changes in internal control over financial reporting during the quarter.
Investor verification points
- Confirm whether this filing is the intended issuer’s filing, given the mismatch with NeuroOne in the request.
- Verify the reported quarter-end cash, current debt, and working-capital deficit, as well as the $4,000 borrowing and $3,000 capital contribution.
- Assess the company’s ability to obtain financing and address the stated going-concern uncertainty.
- Review the very small revenue base and whether reported revenue is recurring or supports the company’s planned business.