Business context and reporting period
The supplied filing is Spatializer Audio Laboratories, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2013—not a filing identified as Enveric Biosciences, Inc. Investors should verify the issuer and filing before relying on this summary. Spatializer says it ceased commercial operations in 2006 and is seeking merger, acquisition, or other business-combination opportunities; it expects no significant operations until a transaction is completed.
Financial results and position
- Revenue: $0 for the three months ended June 30, 2013 and the comparable 2012 quarter.
- Profit and expenses: Quarterly net loss was $3,892, versus $4,082 in 2012; six-month net loss was $8,590, versus $8,127. General and administrative expense was the only reported operating expense. Six-month operating expenses were $8,590, compared with $8,127.
- Margins: Not meaningful given no revenue.
- Cash flow: Cash used in operations was $15,953 in the first six months of 2013, versus $16,031 in 2012. Financing provided $17,000 in officer loans; cash increased $1,047 to $2,428.
- Liquidity and liabilities: Current assets were $6,647 and current liabilities $35,303 at June 30, 2013, yielding negative working capital of $28,656. Liabilities included $25,000 in loans from stockholders and $10,303 in accounts payable and accrued liabilities.
- Equity: Stockholders’ deficit was $28,656, compared with $20,066 at December 31, 2012. Accumulated deficit was $47,400,963.
- Shares: 12,142,000 common shares were outstanding as of July 31, 2013.
Material changes versus the prior comparable period
Quarterly loss narrowed by $190, while the six-month loss increased by $463. Cash increased from $1,381 at December 31, 2012, but current liabilities rose from $25,666 to $35,303, including a $17,000 increase in stockholder loans. Negative working capital worsened from $20,066 to $28,656.
Outlook, risks, and unusual items
- Management stated that cash reserves were insufficient to cover operating obligations for more than 2–3 months without additional capital, and that the company had no current source of future cash flow.
- The filing reports substantial doubt about the company’s ability to continue as a going concern; the financial statements include no adjustments for the outcome of this uncertainty.
- In July 2013, the president made an additional interest-free $2,000 loan for ongoing expenses.
- Federal net operating loss carryforwards were approximately $9.5 million, subject to an approximately $1 million annual limitation and potential ownership-change restrictions.
- Management reported effective disclosure controls and no material changes in internal control over financial reporting. No litigation expected to have a material adverse effect was disclosed, although the filing notes litigation uncertainties.
Important facts for investors to verify
- Confirm the filing belongs to the intended company: the document names Spatializer Audio Laboratories, Inc., while the request identifies Enveric Biosciences, Inc.
- Verify the company’s near-term funding needs, ability to meet obligations, and access to additional capital given the stated 2–3 month cash runway and going-concern uncertainty.
- Review the terms and repayment obligations of the $25,000 stockholder loans and the subsequent $2,000 officer loan.
- Assess the status and prospects of any merger, acquisition, or business-combination discussions; the filing provides no transaction-specific guidance.