SEC Filing Summary: Sport Endurance, Inc. (10-Q)
Business Context and Reporting Period
Company: Sport Endurance, Inc. (formerly Cayenne Construction, Inc.)
Reporting Period: Quarter ended November 30, 2010
Status: Development stage company; no commercial operations.
Business Plan: Intends to manufacture and distribute sports energy drinks. Production and distribution have not commenced.
Share Count: 60,200,000 shares of common stock outstanding as of January 13, 2011.
Key Financial Metrics
| Metric | Q3 2010 (3 Months) | Q3 2009 (3 Months) | Inception to Nov 30, 2010 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(6,688) | $(9,612) | $(186,309) |
| Operating Expenses | $6,485 | $9,612 | $172,863 |
| Cash and Equivalents | $0 | $236 | $0 |
| Total Assets | $20,100 | $23,202 | $20,100 |
| Total Liabilities | $25,889 | $22,303 | $25,889 |
| Working Capital | $(25,889) | $(20,249) | $(25,889) |
| Accumulated Deficit | $(186,309) | $(179,621) | $(186,309) |
Material Changes vs. Prior Period
- Net Loss Reduction: Net loss decreased by approximately 30% ($2,924) compared to the prior year quarter, primarily due to a significant reduction in professional fees.
- Expense Shifts:
- Professional Fees: Decreased from $8,500 to $3,000 (65% drop) due to the absence of S-1 filing costs incurred in the prior year.
- General & Administrative: Increased from $1,112 to $2,437 (119% increase) driven by stock servicing costs.
- Depreciation: Increased from $0 to $1,048 as assets were placed in service.
- Liquidity Deterioration: Cash balance dropped from $59 to $0. Working capital deficit widened to $(25,889).
- Debt: Related party loans increased, with total amounts due to related parties rising from $7,440 to $8,445.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states substantial doubt regarding the company's ability to continue as a going concern. The company has no revenue, an accumulated deficit of $186,309, and zero cash on hand.
- Capital Needs: Management is actively seeking additional equity or debt financing to fund operations. There is no assurance that financing will be secured.
- Management Changes: Former CEO Robert Timothy resigned on December 15, 2010. Gerald Ricks was appointed CEO and Chairman. Other board changes occurred in late December 2010.
- Subsequent Events: On January 7, 2011, the company received a $7,000 unsecured loan from a major shareholder (BK Financial Inc.) to fund operations.
- Internal Controls: Management concluded that disclosure controls and procedures are not effective due to a lack of independent directors, audit committee, and segregation of duties.
Investor Verification Checklist
- Cash Position: Verify the company's current cash balance and ability to meet immediate obligations given the $0 balance reported.
- Financing Status: Confirm if the $7,000 loan received in January 2011 was sufficient to sustain operations or if further capital raises have occurred.
- Related Party Dependence: Assess the sustainability of operations relying on loans from related parties (BK Financial Inc. and former CEO) bearing 10% interest.
- Operational Progress: Verify if the company has commenced any manufacturing or sales of sports energy drinks, as none were reported.
- Internal Controls: Review the status of implementing an independent board and audit committee to address the ineffective controls disclosure.