SEC Form 10-Q Summary
Filing entity and period: The supplied filing is for Olivia Ventures, Inc., not Compass Therapeutics, Inc. It reports the quarter ended June 30, 2019 and was filed August 13, 2019. The company is a Delaware shell and blank-check company formed to identify and complete a business combination; it had no operating business or identified transaction.
Financial Performance and Position
| Metric | Three months ended June 30, 2019 | Three months ended June 30, 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expenses | $10,318 | $7,894 |
| Interest expense | $1,144 | $580 |
| Net loss | $(11,462) | $(8,474) |
| Net cash used in operating activities | $0 | $(7,894) |
| Net cash provided by financing activities | $0 | $15,125 |
| Net change in cash | $0 | $7,231 |
At June 30, 2019, total assets were $4,866, consisting entirely of cash. Current liabilities were $86,917, comprising $14,792 of accounts payable and accrued expenses and a $72,125 stockholder note payable. Stockholders’ deficit was $(82,051), including accumulated deficit of $(82,551). Negative working capital was approximately $82,000.
The stockholder note bears interest at 6% annually and is repayable upon completion of a qualifying business combination or similar transaction. The filing states that total amounts due under the note were $76,600, including $4,474 of accrued interest, with accrued interest reported within accounts payable and accrued expenses.
No meaningful operating margin exists because the company generated no revenue. Basic and diluted loss per share was reported as $(0.00), based on 5,000,000 weighted-average common shares.
Material Changes Versus the Comparable Period
- Net loss increased by $2,988, or approximately 35%, from $8,474 to $11,462.
- General and administrative expenses increased by $2,424, or approximately 31%, while interest expense nearly doubled from $580 to $1,144.
- Operating cash flow improved from $(7,894) to $0 because the 2019 increase in accounts payable and accrued expenses offset the net loss.
- Unlike the prior-year quarter, the company had no financing proceeds during the quarter. Cash remained $4,866 at both March 31 and June 30, 2019.
- Accounts payable and accrued expenses increased from $3,330 at March 31, 2019 to $14,792 at June 30, 2019, while the stockholder note balance shown on the balance sheet remained $72,125.
Outlook, Risks, and Unusual Items
- Management expects to continue searching for a suitable acquisition or merger candidate and anticipates costs for SEC reporting and transaction investigations.
- The company has generated no revenue since inception and has no definitive agreement or specific discussions with a potential business-combination candidate as of the filing date.
- Management states that accumulated losses, negative working capital, limited cash, and dependence on additional financing raise substantial doubt about the company’s ability to continue as a going concern for the twelve months following issuance of the financial statements.
- Management plans to fund operations through additional stockholder borrowings, equity financing, or financing associated with a reverse merger, but the filing provides no assurance that funding will be available.
- In August 2019, subsequent to quarter-end, the company received an additional $6,000 advance under the stockholder note.
- The company’s office space is provided at no charge by the sole officer and a stockholder. No material off-balance-sheet arrangements or material legal proceedings were reported.
- The company is a shell company, smaller reporting company, and emerging growth company. It has elected the JOBS Act extended transition period for certain accounting standards.
- The filing states that disclosure controls and procedures were effective as of June 30, 2019, with no material changes in internal control over financial reporting during the quarter.
Key Facts for Investor Verification
- Confirm the filing entity: the source document identifies Olivia Ventures, Inc., whereas the request identifies Compass Therapeutics, Inc.
- Verify the reporting period, since the request labels the filing “2019 Q1,” while the filing covers the three months ended June 30, 2019.
- Reconcile the stockholder note, accrued interest, and accounts payable classifications, including the filing’s $72,125 balance-sheet note amount and $76,600 total amount due.
- Assess the going-concern risk and the company’s ability to obtain additional related-party or equity financing.
- Determine whether a business-combination target has been identified after the filing date and whether the August 2019 $6,000 advance was sufficient to fund ongoing obligations.