Business context and reporting period
Entity discrepancy: The request identifies Silo Pharma, Inc., but the supplied Form 10-Q is for Gold Swap Inc. The filing describes a New York development-stage company seeking to procure precious metals and second-hand jewelry for refining and resale; it does not describe a pharmaceutical business. This summary reflects the supplied filing, for the quarter ended June 30, 2012.
Gold Swap had not begun meaningful operations and reported no revenue from inception on July 13, 2010 through June 30, 2012.
Financial results and position
- Revenue: None in the three- or six-month periods ended June 30, 2012, or since inception.
- Net loss: $5,668 for Q2 2012 versus $13,853 in Q2 2011; $18,707 for the first six months of 2012 versus $25,751 in the comparable 2011 period. Basic and diluted loss per share was reported as $0.00 for each period.
- Expenses: General and administrative expenses were $5,668 in Q2 and $18,707 for the first half of 2012, compared with $13,853 and $25,751, respectively, in 2011. Management attributed the decrease primarily to lower professional fees after the prior-year S-1 filing work.
- Cash flow: Net cash used in operations was $15,939 in the first half of 2012, versus $22,251 in the first half of 2011. A $15,000 note issuance funded operations; cash declined by $939 during the first half to $813 at June 30.
- Liquidity and liabilities: Current assets and cash were $813; accounts payable were $6,268, producing a $5,455 working-capital deficit. The company also had $15,000 of long-term notes payable and total liabilities of $21,268.
- Equity: Stockholders’ deficit was $20,455 at June 30, 2012, versus $1,748 at December 31, 2011. Common shares outstanding were 30,631,200.
- Margins and debt service: Margins are not meaningful because the company had no revenue. The notes bear 6% interest, with 12% default interest, are unsecured, and were amended to mature February 25, 2014. The filing reports no cash interest paid during the period.
Material changes versus the prior comparable period
- First-half net loss narrowed by $7,044 year over year, and operating cash use decreased by $6,312.
- Cash fell from $1,752 at December 31, 2011 to $813 at June 30, 2012, while accounts payable rose from $3,500 to $6,268.
- The company borrowed $15,000 in February 2012 through five notes of $3,000 each. The notes were amended in April to make principal and accrued interest due in February 2014.
Outlook, risks, and contingencies
Management planned over the next 12 months to locate refinery partners, solicit sellers of unwanted precious-metal items, facilitate shipment to refineries, and earn a spread between scrap and spot prices. It also stated that the proposed timetable had not been achieved, citing the economy and other factors. No quantified revenue, profit, or cash-flow guidance was provided.
Management said the company lacked sufficient funds to carry out its proposed operations over the next 12 months and would need additional capital, with no assurance financing would be available. Officers and directors had orally indicated willingness to cover operating expenses if outside financing was unavailable, but they were not legally or contractually obligated to lend. The filing identifies substantial going-concern uncertainty; continued operations depend on commencing business and obtaining debt or equity funding. The interim statements include no adjustments that might be required if the company cannot continue as a going concern.
The filing reports no off-balance-sheet arrangements, pending legal proceedings, or unregistered equity sales during the period. It states that disclosure controls were effective and that no material change in internal control over financial reporting occurred during the quarter.
Important facts for investors to verify
- Whether this Gold Swap Inc. filing is the intended document, given the request names Silo Pharma, Inc.
- Whether the company obtained financing after the filing date and whether officers or directors provided any funds; the stated support was not binding.
- Whether refinery agreements, operating launch, and customer acquisition occurred, since the filing says the company had not met its proposed timetable.
- The status, accrued interest, and repayment terms of the five $3,000 notes, including any related-party connection identified in the filing.
- Whether the $813 cash balance and working-capital deficit were sufficient to meet near-term obligations; the filing identifies a going-concern risk.