Filing identity and period
Important mismatch: The supplied filing is for First American Group Inc., not Loop Industries, Inc. It is a Form 10-Q for the quarter ended June 30, 2013, filed July 29, 2013. The company describes itself as a development-stage business developing advertising-supported VoIP services. This summary reflects the supplied filing and should not be attributed to Loop Industries without verification.
Financial results and position
- Revenue: None in the three or nine months ended June 30, 2013 or in the period since inception.
- Expenses and loss: Nine-month operating expenses and net loss were $10,079, down from $20,613 in the comparable 2012 period. Third-quarter expenses and net loss were $5,571, versus $8,060. Basic and diluted loss per share was reported as $0.00 loss for each period, rounded.
- Cash flow: Cash used in operations was $17,119 in the first nine months of 2013, compared with $18,059 in 2012. No financing cash was reported in 2013, versus $15,982 from stock sales in 2012.
- Liquidity: Cash was $4,619 at June 30, 2013, down from $21,738 at September 30, 2012. Current assets were $4,819 and current liabilities $4,039, leaving $780 of working capital.
- Liabilities and equity: Current liabilities included $3,714 in accounts payable and accrued expenses and $325 due to a director. The director advance is unsecured, non-interest-bearing, and payable on demand. No other debt is reported.
- Margins: Not meaningful because the company had no revenue.
Changes and business progress
- Nine-month net loss narrowed by $10,534 year over year, primarily as professional fees declined; quarterly net loss also decreased.
- Cash fell substantially from fiscal year-end, and the company said available cash would cover no more than two months of ongoing expenses.
- The company reported installing and integrating open-source VoIP and billing software, but website and product development remained incomplete. Its development timeline had slipped, and it lacked funds to hire programmers.
Outlook, risks, and controls
- Management stated that no sales revenue was expected in the next nine months and projected revenue generation approximately 10 to 16 months after the report. Illustrative projections of $153,750 in year two and $460,000 in year three depend on assumptions about development, customer demand, traffic, and advertiser interest; they are not assured results.
- The filing says the company has no financing arranged and needs additional capital to develop its product and fund operations. Management and the financial statements warn of substantial doubt about the company’s ability to continue as a going concern; failure to obtain financing could prevent the business plan from continuing. Proposed equity financing could dilute existing shareholders.
- Disclosure controls were deemed ineffective as of June 30, 2013 because of lack of segregation of duties. No material changes to internal control over financial reporting were reported during the quarter.
- No pending legal proceedings or subsequent events were reported.
Important facts for investors to verify
- Confirm the issuer: the provided document identifies First American Group Inc., not Loop Industries, Inc.
- Reconcile the share-count disclosures: the balance sheet text reports 2,401,450 issued and outstanding, while the cover reports 2,521,264 shares outstanding as of July 29, 2013, and the narrative describes 2,000,000 insider shares plus 521,264 registered shares.
- Verify the company’s actual cash runway, ability to raise financing, and terms or dilution from any future equity issuance.
- Assess whether development milestones and revenue assumptions are achievable; the filing reports no revenue, delays, and no funds to hire programmers.