SEC Filing Summary: Cactus Ventures, Inc. (10-Q)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2008, and the nine-month period then ended. The registrant is Cactus Ventures, Inc., a Nevada corporation and shell company with no active operations. The company is seeking a merger or acquisition with a target business entity to become a public reporting company. It has no employees, no owned property, and utilizes office space at the President's residence at no cost.
Key Financial Metrics
| Metric | Nine Months Ended Sep 30, 2008 | Nine Months Ended Sep 30, 2007 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(23,631) | $(10,163) |
| Operating Expenses | $20,103 | $7,493 |
| Interest Expense | $3,528 | $2,670 |
| Cash and Cash Equivalents (Sep 30, 2008) | $2,242 | N/A |
| Total Liabilities (Sep 30, 2008) | $68,591 | $45,032 (Dec 31, 2007) |
| Shareholders' Deficit (Sep 30, 2008) | $(66,349) | $(42,717) (Dec 31, 2007) |
| Working Capital Deficiency | $(19,522) | N/A |
Material Changes vs. Prior Period
- Increased Losses: The net loss for the nine months ended September 30, 2008, increased to $23,631 from $10,163 in the prior year period. This was driven by a rise in operating expenses from $7,493 to $20,103, primarily due to higher professional fees ($12,840 vs. $6,505) and other costs.
- Liability Growth: Total liabilities increased significantly from $45,032 at year-end 2007 to $68,591 at September 30, 2008. This includes a rise in notes payable to related parties from $35,959 to $46,827 and accrued interest from $3,678 to $7,206.
- Cash Position: Cash on hand decreased slightly from $2,314 at December 31, 2007, to $2,242 at September 30, 2008.
Outlook, Risks, and Contingencies
Going Concern: The filing explicitly states that the company's independent auditors have expressed substantial doubt about its ability to continue as a going concern. This is due to the accumulated deficit, negative working capital, and lack of revenue. Continuation is dependent on raising additional funds and successfully implementing a business plan (merger/acquisition).
Financing Needs: The company anticipates needing additional capital to meet liquidity needs. It plans to rely on contributions from shareholders, loans from officers/directors, or the sale of common stock. There are no binding agreements for future funding.
Risk Factors:
- Speculative Nature: No assurance exists that the company will identify or consummate a business combination.
- Management Limitations: Management devotes limited time to the company, and the sole officer has no written employment agreement.
- Stock Liquidity: The stock is subject to "Penny Stock" rules, which may severely restrict resale and liquidity.
- Competition: The company faces significant competition from better-funded entities in the search for acquisition targets.
Investor Verification Checklist
- Capital Sufficiency: Verify if the company has secured the shareholder contributions or loans necessary to cover the $19,522 working capital deficiency and ongoing operating costs.
- Related Party Debt: Review the terms of the $46,827 in notes payable to related parties to understand repayment obligations and interest rates.
- Merger Progress: Confirm if any specific target companies are currently under negotiation, as the business model relies entirely on a future acquisition.
- Legal Compliance: Ensure the company remains current on SEC reporting obligations despite its shell status and financial constraints.