Filing identity and reporting period
Important identity discrepancy: The request identifies Relmada Therapeutics, Inc., but the supplied filing is for Camp Nine, Inc., a Nevada development-stage surfboard business. This summary reflects the supplied Camp Nine filing, not a Relmada filing.
The Form 10-Q covers the quarter ended November 30, 2013, and was signed January 10, 2014. The company describes its results as interim and not necessarily indicative of full-year performance.
Business context
Camp Nine designs, markets, and sells surfboards through its wholly owned subsidiary. Sales to date were on Oahu, Hawaii. The company reported seven surfboards in inventory and planned to assess demand for new models before deciding whether to build more inventory. It identified itself as a smaller reporting company and checked the box indicating it was a shell company.
Financial results and liquidity
| Metric | Three months ended Nov. 30, 2013 | Comparable 2012 period |
|---|---|---|
| Revenue | $1,850 | $2,149 |
| Cost of goods sold | $1,686 | $1,850 |
| Gross profit | $164 | $299 |
| Gross margin | 8.9% | 13.9% |
| Operating expenses | $14,538 | $9,319 |
| Net loss | $14,374 | $9,020 |
| Cash used in operating activities | $9,124 | Cash provided: $1,497 |
At November 30, 2013, cash was $6,166, inventory $4,734, total current assets $10,900, accounts payable and total current liabilities $40,331, and total assets $12,300. Working capital was negative $29,431 and the current ratio was approximately 0.27. Stockholders’ deficit was $28,031; accumulated development-stage deficit was $71,531. The balance sheet reports accounts payable as the only liability and no debt balance. No interest or income taxes were paid during the periods presented.
Cash fell from $15,290 at August 31, 2013 to $6,166 at quarter-end. No investing or financing cash flows were reported in the quarter. Since inception, the filing reports $14,920 in revenue, $71,531 in net losses, and $35,534 in cash used in operating activities.
Material changes, outlook, and risks
- Revenue declined about 14% year over year, while gross profit fell about 45% and gross margin contracted by roughly 5 percentage points. Operating expenses rose about 56%, primarily reflecting higher general and administrative expense; the net loss widened about 59%.
- Management stated that existing cash was insufficient to operate at the current level for the next 12 months. It planned to pursue additional capital through private equity offerings and potentially debt financing, alongside increased sales and expense reductions; success and availability on acceptable terms were not assured.
- The filing and management’s discussion state that limited liquidity, cumulative losses, and the absence of sufficiently stable revenue raise substantial doubt about the company’s ability to continue as a going concern. The company expected further losses and depended on additional capital.
- Manufacturing relied on independent contractors without written agreements; their availability or changes in terms could disrupt production. The company also cited intense competition and limited marketing resources.
- Management concluded disclosure controls and procedures were ineffective as of period-end. The filing reports no pending legal proceedings, no off-balance-sheet arrangements, and no material subsequent events requiring disclosure.
- No quantitative operating guidance was provided. Management’s plans to test demand for certain models and seek financing are conditional, not assured outcomes.
Most important facts for investors to verify
- Confirm the filing belongs to the intended issuer: the supplied document names Camp Nine, Inc., not Relmada Therapeutics, Inc.
- Verify the company’s near-term funding needs, access to financing, and going-concern disclosures in subsequent filings.
- Assess whether sales and gross margins can support operating costs, given the very low quarterly revenue and expanding loss.
- Review the reported ineffective disclosure controls and any later remediation or restatement disclosures.
- Reconcile the discussion’s reference to historical convertible-debt funding with the quarter-end balance sheet, which reports accounts payable but no debt.