SEC Filing Summary: Rosewind Corporation (10-Q)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended May 31, 2009, for Rosewind Corporation, a development-stage company. The registrant's stated mission is to operate an offshore sailing school, utilizing a US Coast Guard documented vessel located in New Zealand. As of the filing date, the company had trained only two students since inception in 2005, with only one paying student generating revenue. The company is classified as a "Smaller Reporting Company" and is not a shell company.
Key Financial Metrics
| Metric | Three Months Ended May 31, 2009 | Nine Months Ended May 31, 2009 | Balance Sheet (May 31, 2009) |
|---|---|---|---|
| Revenue | $1,750 | $1,750 | N/A |
| Net Loss | $(9,533) | $(47,659) | N/A |
| Total Assets | N/A | N/A | $43,100 |
| Cash and Cash Equivalents | N/A | N/A | $12,790 |
| Total Current Liabilities | N/A | N/A | $55,380 |
| Working Capital | N/A | N/A | $(42,333) |
| Accumulated Deficit | N/A | N/A | $(242,904) |
| Shares Outstanding | N/A | N/A | 3,432,000 |
Note: The filing text does not provide explicit margin percentages due to the negligible revenue relative to operating expenses.
Material Changes vs. Prior Period
- Revenue: The company generated $1,750 in revenue for the nine months ended May 31, 2009, compared to $0 for the same period in 2008. This revenue came from a single student training voyage.
- Net Loss: The net loss for the nine months ended May 31, 2009, was $47,659, an increase of approximately 10% compared to the $44,781 loss in the prior year period.
- Expenses: General and administrative expenses increased by $3,957 (17%) to $27,078, attributed to boat repair and maintenance. Interest expense increased by $654 to $2,252 due to higher unsecured notes payable balances.
- Liquidity: Cash decreased from $37,643 at August 31, 2008, to $12,790 at May 31, 2009. The company now reports a working capital deficit of $42,333.
Outlook, Risks, and Management Commentary
Going Concern: The financial statements include a "Going Concern" warning. Management states that the company's continuation is dependent on generating sufficient cash flow and attaining profitability. There is no assurance that additional funding will be successful.
Liquidity Outlook: Management estimates remaining cash is sufficient to sustain operations for a maximum of three months from the report date. Without student revenue or additional funding, the company may be forced to close.
Operational Risks:
- Asset Location: The company's sole significant asset (the sailing vessel) is located in New Zealand, creating recovery risks for US investors.
- Regulatory Compliance: The company has not yet secured all necessary commercial licenses in foreign jurisdictions, which could delay operations or deplete cash reserves.
- Insurance: The vessel, captain, and operations are currently uninsured, exposing the company to unlimited liability risks.
- Key Personnel: The company relies entirely on one individual (James B. Wiegand) who serves as President, CFO, and Secretary. The Captain is his son. Neither has a written employment contract.
Subsequent Events: In July 2009, the company sold 10,000 shares of common stock for $2,000 pursuant to a private placement.
Investor Verification Checklist
- Cash Runway: Verify if the company has secured the additional funding required to survive beyond the estimated three-month cash runway.
- Revenue Validation: Confirm if the company has successfully booked additional paying students beyond the single $1,750 transaction reported.
- Related Party Loans: Review the terms of the $54,615 in loans payable to related parties (officer/director) and the accrued interest of $765.
- Asset Security: Assess the legal enforceability of the secured promissory note against the vessel located in New Zealand.
- Regulatory Status: Determine if the company has obtained necessary commercial licenses to operate the sailing school in foreign ports.