Filing summary
Issuer and period: The supplied filing is for First American Group Inc., not Loop Industries, Inc. It is a Form 10-Q for the three months ended December 31, 2011, not a 2012 first-quarter report. The filing identifies the company as a development-stage company and checks “yes” for shell-company status.
Business context
First American Group described plans to develop VoIP telephone services offering free calls in exchange for viewing or listening to advertising, with additional potential revenue from paid calls and software licensing or sales. The company reported no operating revenue and had not begun operations.
Financial results and position
| Metric | Three months ended Dec. 31, 2011 | Comparable 2010 period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $4,964 | $2,379 |
| Net loss | $4,964 | $2,379 |
| Net cash used in operating activities | $5,296 | $379 |
| Cash raised from stock sales | $4,025 | $0 |
At December 31, 2011, cash was $29,029, total assets were $30,029, current liabilities were $6,315, and stockholders’ equity was $23,714. Current liabilities included $5,990 of accounts payable and accrued expenses and $325 due to a director. The director advance was unsecured, non-interest-bearing, and payable on demand. The filing reports no other debt balance.
During the quarter, the company issued 40,250 shares at $0.10 per share for $4,025. It reported 2,401,700 shares outstanding as of February 8, 2012.
Changes, outlook, and risks
- Quarterly net loss increased from $2,379 to $4,964, largely alongside higher professional fees ($4,358 versus $2,000). Cash used in operations also increased.
- Management said available cash was insufficient to start the plan or fund ongoing expenses beyond six months. The company had no financing arranged and depended on raising additional capital, principally through equity offerings; success was not assured and new equity could dilute existing holders.
- The financial statements disclose substantial doubt about the company’s ability to continue as a going concern. Management said future development and working capital would depend largely on loans and equity sales until operations could fund needs.
- Management projected no revenue during the initial product-development year, followed by estimated revenue of $153,750 in year two and $460,000 in year three. These were projections, not reported results, and depended on completing the offering, developing the product, and attracting users and advertisers. The filing gives differing revenue-start estimates: approximately 15–21 months in one passage and 10–16 months in another.
- No subsequent events were reported through the filing date; the company reported no pending material legal proceedings. Management concluded disclosure controls were effective and reported no material quarterly change in internal controls.
Facts for investors to verify
- Confirm the issuer and reporting period: the provided document is First American Group Inc.’s December 2011 filing, not a Loop Industries filing.
- Verify the company’s current status, business activities, and whether the proposed VoIP product or revenue model was ever launched.
- Review financing history, cash runway, share issuances, and dilution, given the going-concern warning and stated reliance on additional capital.
- Assess the assumptions behind management’s revenue projections and reconcile the filing’s differing estimates for when revenue might begin.