Filing and period
The supplied filing is Camp Nine, Inc.’s Form 10-K for the fiscal year ended August 31, 2013—not a Relmada Therapeutics filing or a 2012 fourth-quarter report. The filing describes Camp Nine as a development-stage surfboard business operating through its wholly owned Hawaii subsidiary. The company’s products are sold on Oahu, with surfboards manufactured by independent contractors.
Financial results and liquidity
| Metric | FY ended Aug. 31, 2013 | FY ended Aug. 31, 2012 |
|---|---|---|
| Revenue | $5,129 | $7,941 |
| Cost of goods sold | $4,036 | $5,799 |
| Gross profit (margin) | $1,093 (21.3%) | $2,142 (27.0%) |
| Operating expenses | $46,108 | $14,194 |
| Net loss | $45,015 | $12,052 |
| Net cash used in operating activities | $11,859 | $7,565 |
| Cash at year-end | $15,290 | $8,949 |
At August 31, 2013, current assets were $18,459, including $3,169 of inventory; current liabilities were $33,666, all reported as accounts payable. Working capital was therefore negative $15,207. Total assets were $20,009 and stockholders’ equity was negative $13,657. The balance sheet reports no long-term debt. The company raised $20,000 by issuing 5 million shares in July 2013; cash flow from financing activities was $20,000. No interest or income taxes were paid during the year.
Changes, outlook, and risks
- Revenue declined about 35% year over year, while operating expenses increased from $14,194 to $46,108, driving the net loss to $45,015 from $12,052. General and administrative expense rose to $45,076 from $9,090.
- Management states it lacks sufficient cash to operate at the current level for the next 12 months and expects to rely on increased sales and additional debt or equity financing. It provides no quantified revenue, earnings, or cash-flow guidance; financing is not assured.
- The auditor and management identify substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no adjustments for the possible outcome of this uncertainty.
- Management reported ineffective disclosure controls and ineffective internal control over financial reporting, citing inadequate segregation of duties and insufficient written accounting and reporting procedures. Remediation depends largely on obtaining financing.
- Risks include intense local and national competition, seasonal sales, dependence on contractors without written supply agreements, limited operating history and capital, and the absence of a public market for the shares. The filing says the company may reduce or stop manufacturing performance models and will assess customer response to new models before committing to further production.
- The company reported no pending legal proceedings and no off-balance-sheet arrangements.
Important facts to verify
- Confirm the issuer and reporting period: the supplied document is for Camp Nine, Inc., fiscal 2013, despite the request metadata naming Relmada Therapeutics and 2012 Q4.
- Reconcile the filing’s cumulative-loss disclosures: the financial statements report $57,157 from inception through August 31, 2013, while the going-concern discussion also refers to $45,105 in one passage.
- Review the underlying financial statements and notes for the company’s accounts payable, cash needs, and ability to obtain financing; the filing does not provide a clear maturity schedule for liabilities.
- Assess the implications of the going-concern warning, ineffective controls, single-person management structure, and lack of a public trading market.