Filing identity and reporting period
Important identification issue: The supplied filing is Point Capital, Inc.’s Form 10-Q for the quarter ended September 30, 2013—not a filing by Silo Pharma, Inc. The figures and disclosures below belong to Point Capital and should not be attributed to Silo Pharma.
Point Capital, a development-stage company, reported unaudited results for the third quarter and nine months ended September 30, 2013, with comparisons to 2012. Formerly Gold Swap, Inc., it had been unable to execute its precious-metals business plan. On October 4, 2013, after the reporting date, it elected to become a business development company (BDC), intending to invest in and support growth businesses.
Financial results and position
| Metric | Three months ended September 30, 2013 | Nine months ended September 30, 2013 |
|---|---|---|
| Revenue | None | None |
| General and administrative expenses | $5,744 | $51,103 |
| Net loss | $5,744 | $51,103 |
| Net loss per common share | $0.00, rounded | $0.00, rounded |
| Net cash used in operating activities | Not separately reported | $60,984 |
There was no revenue or gross margin to report. At September 30, cash and total assets were $1,259,100; current liabilities were $715,478, and working capital and stockholders’ equity were each $543,622. Current liabilities included $673,886 of common stock payable, $20,000 of notes payable, and $1,642 of interest payable. The filing reports no long-term liabilities at quarter-end. Cash exceeded the federally insured limit by $1,009,100.
Financing activities provided net cash of $1,319,805 in the first nine months. The company raised $400,000 from Series A convertible preferred stock and $1,100,000 gross from common stock sales; offering costs and other items affected cash proceeds. The preferred stock is convertible into 2,000,000 common shares. The company reported 36,231,200 common shares outstanding at September 30 and 37,731,200 as of November 14, 2013.
Changes, outlook, and risks
- Third-quarter G&A expense and net loss fell approximately 33% from 2012, which management attributed to lower professional-fee needs. Nine-month expense and net loss increased approximately 87%, primarily due to professional fees associated with an April 2013 investment and the merger, reincorporation, and name change.
- Management estimated a next-12-month working-capital requirement of $95,000 and a monthly burn rate of approximately $8,000, and believed available cash would cover at least 12 months of requirements. It also said additional capital might not be available if needed.
- After quarter-end, the company closed a further $300,000 common-stock placement on October 31 and collected the $100,000 subscription receivable outstanding at September 30. Placement-agent compensation included cash and shares; shares due were not required to be issued until a final closing.
- Management described financial, operational, technological, regulatory, and other risks typical of a development-stage company, including the possibility of business failure. The filing says the company had generated no revenue since inception. No pending material legal proceedings or off-balance-sheet arrangements were reported.
- Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter. No formal revenue or earnings guidance was provided.
Key facts for investors to verify
- Confirm the issuer: this document identifies Point Capital, Inc., not Silo Pharma, Inc.
- Verify the October 4, 2013 BDC election and the company’s subsequent business plans and operating status.
- Review the economics and issuance terms of the placement-agent shares and the preferred stock’s conversion and triggering-event provisions.
- Reconcile quarter-end share counts, the subsequent October placement, and the subscription receivable collection with later filings.
- Assess the stated cash runway against actual spending, the large uninsured cash balance, and the company’s lack of operating revenue.