Business Context and Reporting Period
Company: Hotel Management Systems, Inc. (filing under name BTCS Inc. in metadata, but identified as Hotel Management Systems, Inc. in text).
Reporting Period: Quarterly period ended January 31, 2010.
Status: Development stage company; smaller reporting company; shell company.
Business Overview: The company is developing a proprietary hotel management software platform ("Hotel Management Tool") targeting small independent hotels and motels. The software includes modules for product/supplies management, employee data, and employment counseling. As of the filing date, the company has no employees other than its sole officer and director, John Baumbauer, who works without compensation.
Key Financial Metrics
| Metric | Three Months Ended Jan 31, 2010 | Nine Months Ended Jan 31, 2010 | From Inception (Apr 15, 2008) to Jan 31, 2010 |
|---|---|---|---|
| Revenues | $0 | $0 | $0 |
| Operating Expenses | $29,121 | $52,163 | $94,937 |
| Net Loss | $(29,121) | $(52,163) | $(94,937) |
| Cash and Cash Equivalents | $10,567 (as of Jan 31, 2010) | ||
| Total Assets | |||
| Total Liabilities | $79,275 (Accounts payable and accrued expenses) | ||
| Working Capital Deficit | $(68,708) | ||
| Stockholders' Deficit | $(68,708) | ||
| Shares Outstanding | 7,000,000 |
Material Changes vs. Prior Period
- Expense Increase: Operating expenses for the three months ended January 31, 2010, were $29,121, a significant increase from $229 in the same period in 2009. For the nine-month period, expenses rose to $52,163 compared to $5,918 in the prior year.
- Cash Burn: Cash on hand decreased from $19,281 as of April 30, 2009, to $10,567 as of January 31, 2010. Net cash used in operating activities for the nine months ended January 31, 2010, was $8,714.
- Liabilities: Accounts payable and accrued expenses increased from $35,826 to $79,275, reflecting the accumulation of unpaid operating costs.
Outlook, Risks, and Management Commentary
- Going Concern: The company has not established an ongoing source of revenues sufficient to cover operating costs. The auditors have expressed substantial doubt about the company's ability to continue as a going concern. Continued operations depend on obtaining adequate capital from management, significant shareholders, or external financing.
- Operational Delays: The planned direct mail marketing campaign, originally scheduled for the third quarter of the fiscal year, has been delayed due to the time constraints of the sole officer/director. Management hopes to begin the campaign in the first half of 2010.
- Capital Needs: Current cash reserves ($10,567) are expected to cover expenses for the remainder of the current fiscal year but are insufficient for operations beyond that period or for significant unanticipated expenses. No financing arrangements are currently in place.
- Risks: Risks include the inability to secure financing, the limited time availability of the sole officer, and the competitive nature of the hotel management software market.
Investor Verification Checklist
- Capital Sufficiency: Verify if the company has secured the additional financing required to operate beyond the current fiscal year, as current cash is insufficient.
- Revenue Generation: Confirm the status of the marketing campaign and whether any revenue-generating contracts have been signed, given zero revenue since inception.
- Liability Management: Assess the nature of the $79,275 in accounts payable and whether there are any immediate demands for payment that could force cessation of operations.
- Management Capacity: Evaluate the impact of the sole officer's outside professional duties on the company's ability to execute its business plan and launch the product.