SEC Filing Summary: SA Recovery Corp. (Form 10-K)
Business Context and Reporting Period
Company: SA Recovery Corp. (Ticker: SARY)
Reporting Period: Fiscal year ended February 28, 2011
Status: Development stage enterprise; self-identified as a "shell company" as of December 2010.
Operations: The company was formed to develop a "Mobile Unit" to remove contaminants from sand. As of the filing date, the prototype has failed to perform as anticipated due to technical issues (leaking, clogging), and the company has ceased active development attempts pending financing. The company has generated no revenue since inception (July 28, 2008).
Key Financial Metrics
| Metric | Year Ended Feb 28, 2011 | Year Ended Feb 28, 2010 | Cumulative (Inception to Feb 28, 2011) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(41,967) | $(54,947) | $(189,577) |
| Cash and Cash Equivalents | $2,238 | $2,170 | N/A |
| Total Assets | $2,238 | $2,170 | N/A |
| Total Liabilities | $124,204 | $84,470 | N/A |
| Working Capital Deficit | $(121,966) | $(82,300) | N/A |
| Shares Outstanding | 31,073,593 | 31,073,593 | N/A |
Note: The company has no full-time employees. Operations are funded by loans from related parties.
Material Changes vs. Prior Period
- Liabilities: Total current liabilities increased by approximately $39,734 (47%) from $84,470 in 2010 to $124,204 in 2011. This increase is driven by a rise in related-party notes payable (from $9,150 to $33,375) and accrued director salary (from $5,000 to $10,000).
- Net Loss: The net loss decreased by $12,980 compared to the prior year, primarily due to lower interest expense and the absence of amortization of intangible assets (the license agreement expired and was not renewed).
- Asset Status: The company ceased attempts to seek financing for the Mobile Unit in December 2010, effectively halting development operations and reducing the entity to a shell company with minimal assets.
Guidance, Outlook, Risks, and Contingencies
Going Concern: Auditors have expressed substantial doubt regarding the company's ability to continue as a going concern. The company has no current source of income and relies on shareholder loans to meet filing obligations.
Outlook and Plan of Operation: Management estimates a need for approximately $160,000 to address technical problems with the Mobile Unit or to pursue a merger/acquisition. If this capital is not raised, the company may cease operations. There are no definitive agreements for future financing.
Key Risks:
- Product Failure: The prototype unit has failed to perform as anticipated; no commercial product exists.
- Liquidity: Insufficient cash to meet working capital needs; dependent on related-party advances.
- Internal Controls: Management identified material weaknesses in internal controls, including a lack of segregation of duties and no independent audit committee.
- Management: The sole officer/director (James Ditanna) has no experience in the environmental sector and devotes limited time to the company.
- Control: IACE Investments Two, Inc. owns approximately 80.45% of the common stock, controlling all shareholder matters.
Investor Verification Checklist
- Shell Status: Verify the company's classification as a shell company and the lack of active operations.
- Related Party Debt: Confirm the terms and repayment status of the $33,375 related-party note and $10,000 accrued director salary.
- Convertible Note Default: Investigate the status of the $65,000 convertible note (due Feb 28, 2011), which is currently in default and convertible into 2 million shares.
- Capital Raise: Assess the feasibility of raising the estimated $160,000 required for operations or a merger.
- Stock Liquidity: Review trading volume on the OTC Pink Sheets (symbol SARY), which has been minimal to non-existent in recent quarters.