SEC Filing Summary: Desert Gateway, Inc. (10-Q)
Business Context and Reporting Period
This filing is a Quarterly Report on Form 10-Q for the period ended May 31, 2009. Although the request metadata referenced "Travere Therapeutics," the source document explicitly identifies the registrant as Desert Gateway, Inc., a Delaware corporation. The company operates as a shell company with no active business operations, organized to investigate and acquire a target company to achieve the benefits of being publicly held. The filing was signed on October 25, 2010.
Key Financial Metrics
| Metric | Three Months Ended May 31, 2009 | Three Months Ended May 31, 2008 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | ($7,645) | ($3,376) |
| Cash and Cash Equivalents | $4,752 | $5,000 (End of period) |
| Total Assets | $4,752 | $5,000 (End of period) |
| Total Liabilities | $42,652 | $38,026 (End of period) |
| Stockholders' Deficiency | ($37,900) | ($33,026) (End of period) |
| Accumulated Deficit | ($77,901) | ($70,256) |
| Convertible Debt (Carrying Value) | $7,293 | $4,167 |
Note: The company reported no revenue or gross margin. Expenses consisted of general and administrative costs ($4,019) and interest/amortization of debt discount ($3,626).
Material Changes vs. Prior Period
- Increased Net Loss: Net loss increased from $3,376 in the prior year period to $7,645, primarily driven by $3,626 in interest and amortization of debt discount, which was $0 in the prior period.
- Debt Amortization: The company recognized a significant non-cash expense related to the amortization of a discount on a convertible promissory note issued in November 2008.
- Related Party Transactions: The company recorded $3,000 in fair value of services and office space provided by the sole officer/director, consistent with the prior period.
- Liquidity: Cash decreased slightly by $19 during the quarter, leaving the company with minimal working capital.
Outlook, Risks, and Management Commentary
Plan of Operation: Management intends to seek a business combination (merger or acquisition) with a private or public entity. The company has no current operations generating cash flow and relies on advances from stockholders, officers, and directors to meet expenses.
Going Concern: The filing explicitly states that the company's negative working capital, negative stockholders' equity, and lack of revenue raise substantial doubt about its ability to continue as a going concern. Continued operations depend on locating a merger candidate and securing additional capital.
Key Risks:
- Insolvency: The company is insolvent and unable to pay debts as they become due without external funding.
- Speculative Nature: There is no assurance a suitable business combination will be found or consummated.
- Management Limitations: The sole officer/director works on an "as needed" basis and has other full-time employment.
- Stock Liquidity: The common stock trades on the OTC "Pink Sheets" with no assurance of a liquid market.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of the end of the period.
Investor Verification Checklist
- Verify the registrant name is Desert Gateway, Inc., not Travere Therapeutics, Inc.
- Confirm the status of the $25,000 convertible note maturing November 1, 2010, and the company's ability to repay or convert it.
- Assess the going concern risk given the $4,752 cash balance against $42,652 in total liabilities.
- Review the ineffective internal controls disclosure for potential financial reporting risks.
- Check for any updates on the search for a business combination target, as the company has no independent revenue stream.