Filing summary
Entity: The supplied filing is for Sport Endurance, Inc., not SRX Global Inc. Investors should verify the issuer and filing identity. It is a Form 10-Q for the quarter ended February 29, 2016, covering the three- and six-month periods; amounts below are as reported.
Business context and financial results
The company reported no revenue in either the current or comparable prior-year quarter or six-month period. Its stated plans refer inconsistently to manufacturing and distributing liquid Gel Caps and sports energy drinks; management says it had not yet produced or distributed sports energy drinks.
| Metric | Three months ended Feb. 29, 2016 | Six months ended Feb. 29, 2016 | Comparable 2015 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $7,482 | $23,915 | $10,996 / $13,252 |
| Interest expense | $4 | $2,257 | $7,752 / $12,253 |
| Net loss | $7,486 | $26,172 | $18,748 / $25,505 |
| Net loss per share, basic and diluted | $(0.00) | $(0.00) | $(0.00) |
No meaningful operating margin is available because there was no revenue. For the six months, operating cash use was $17,294, compared with $11,443 in the prior-year period. Financing provided $17,394, including $14,500 from a common-stock sale and $1,194 in CEO advances; ending cash was $100.
Liquidity, debt, and capital
- At February 29, 2016, current assets were $100 and current liabilities were $28,045, producing a $27,945 working-capital deficit. Total assets were $1,198; stockholders’ deficit was $26,847.
- Convertible debt declined from $38,543 at August 31, 2015 to zero, following debt conversions and repayment. The CEO had advanced $1,194, unsecured, non-interest-bearing and due on demand.
- Common shares outstanding increased from 37,581,903 to 77,575,303. The company also reported a $5,372 stock subscription receivable.
Changes, outlook, and risks
- Six-month net loss increased by $667 year over year, despite a $9,996 reduction in interest expense; general and administrative expense rose by $9,748. Quarterly net loss improved by $11,262, primarily as interest expense and professional fees fell.
- Effective February 4, 2016, David Lelong acquired a 52.248% stake, became controlling shareholder and assumed the CEO, president, secretary, treasurer, chairman and CFO roles.
- Management stated it expects operating losses over the next 12 months and does not anticipate enough revenue to meet working-capital needs. It plans to seek equity or debt financing, but gave no quantified guidance. The filing warns that unavailable financing could force the company to slow or suspend operations.
- The filing states that recurring losses, a $457,625 accumulated deficit, a $27,945 working-capital deficit and limited cash raise substantial doubt about the company’s ability to continue as a going concern. Management says the statements include no adjustments for a possible failure to continue as a going concern.
- Management reported disclosure controls were ineffective, citing no independent board or audit committee, inadequate segregation of duties and reliance on a financial consultant for financial reporting. No material pending legal proceedings were reported.
Important facts to verify
- Whether this Sport Endurance, Inc. filing is relevant to the requested SRX Global Inc.
- The company’s intended product and business plan, given the conflicting references to Gel Caps and sports energy drinks.
- Available financing, near-term cash needs and the status of the going-concern risk.
- The debt-conversion, share-issuance and $5,372 subscription-receivable details, including the resulting dilution.
- Whether management’s planned improvements to internal controls have been implemented.