Filing Summary
Important identity and period note: The request identifies Relmada Therapeutics, Inc., but the supplied filing is for Camp Nine, Inc., a development-stage surfboard manufacturer and retailer. It is a Form 10-Q for the quarter ended February 28, 2013, and reports three- and six-month results. The filing also checks the box indicating the company is a shell company.
Business Context and Reporting Period
Camp Nine sells surfboards and related accessories, with sales to date focused on Oahu, Hawaii. Its wholly owned Camp Nine, LLC subsidiary conducts the operating business. The balance sheet compares February 28, 2013 with August 31, 2012; the income statement and cash flow statement include comparisons with the six months ended February 29, 2012.
Key Financial Metrics
| Metric | Three months ended Feb. 28, 2013 | Six months ended Feb. 28, 2013 | Comparable 2012 period |
|---|---|---|---|
| Revenue | $2,346 | $4,495 | $6,026 |
| Cost of goods sold | $1,864 | $3,714 | $4,509 |
| Gross profit | $482 | $781 | $1,517 |
| Gross margin | 20.5% | 17.4% | 25.2% |
| Operating expenses | $4,628 | $13,947 | $2,020 / $2,459 |
| Net loss | $4,146 | $13,166 | $503 / $942 |
At February 28, 2013, cash was $7,504, inventory was $2,690, total current assets were $10,194, and total assets were $10,194. Current liabilities, all reported as accounts payable, were $12,002; working capital and stockholders’ equity were each negative $1,808. No debt or interest expense is reported. The current ratio was approximately 0.85.
For the six months, operating cash outflow was $1,445, with no financing cash flow; cash declined from $8,949 to $7,504. The filing reports $23,500 of cumulative cash proceeds from stock issuance since inception, but no stock-issuance proceeds in this six-month period.
Changes Versus the Prior Comparable Period
- Six-month revenue declined by $1,531, or about 25%, from $6,026; six-month gross profit fell by $736.
- Six-month operating expenses rose to $13,947 from $2,459, primarily reflecting general and administrative expense of $12,915 versus $992.
- The six-month net loss widened to $13,166 from $942. The three-month net loss also increased to $4,146 from $503.
- Compared with August 31, 2012, cash fell by $1,445, inventory declined by $3,715, and accounts payable increased by $5,006. Stockholders’ equity moved from positive $11,358 to negative $1,808.
Outlook, Risks, and Other Items
Management said the company expects to rely on additional investment capital in the near term and plans to seek equity and/or debt financing; it had no formal financing commitments and gave no assurance financing would be available. The filing says limited liquidity, accumulated losses, negative working capital, and insufficiently stabilized revenue raise substantial doubt about the company’s ability to continue as a going concern.
Plans included spending $6,000 to produce approximately 15 additional surfboards, increasing saleable inventory to about 19 boards, and introducing the planned Classic model by the end of summer 2013, subject to prototype development. These are plans, not financial guidance. Risks discussed include intense competition, dependence on independent contractors without written agreements, limited capital, and possible failure of the new model’s prototype. The company reported no pending legal proceedings and no off-balance-sheet arrangements. Management concluded disclosure controls were effective and reported no quarterly changes in internal control over financial reporting.
The filing contains an apparent inconsistency: its statements report revenue, but the going-concern discussion says the company “has not yet received revenues from sales of products or services.” The statements show cumulative operating expenses of $28,231, while MD&A gives $28,230.
Important Facts for Investors to Verify
- Confirm the filing belongs to the intended issuer: the supplied 10-Q is for Camp Nine, Inc., not Relmada Therapeutics, Inc.
- Verify the revenue history and reconcile the filing’s revenue figures with its statement that no product or service revenue had been received.
- Assess liquidity, accounts payable, going-concern uncertainty, and the feasibility and terms of planned financing.
- Check progress and costs for inventory expansion and the Classic prototype, and whether contractor capacity is secured.
- Reconcile the $1 difference in cumulative operating expenses between the financial statements and MD&A.