Business context and reporting period
The supplied filing does not identify Vivosim Labs, Inc. It is a Form 10-Q for Organovo Holdings, Inc. (formerly Real Estate Restoration and Rental, Inc.), for the quarter ended December 31, 2011. The company describes itself as a development-stage company with minimal operations. Its prior stated business focused on real estate renovation and management; it had changed its name on December 28, 2011 while discussing a possible business combination with Organovo, Inc.
Financial performance and position
| Metric | Current period | Comparable period / prior date |
|---|---|---|
| Revenue | $1,677 for six months; $0 for the three months ended December 31, 2011 | $0 for the six and three months ended December 31, 2010 |
| Operating expenses | $68,628 for six months, including $62,097 professional fees and $6,531 general and administrative expenses | $55,546 for six months ended December 31, 2010 |
| Net loss | $66,951 for six months; $43,506 for the quarter | $55,546 for six months and $29,826 for the quarter ended December 31, 2010 |
| Cash from operations | $(10,522) for six months | $(48,693) for six months ended December 31, 2010 |
| Cash | $753 at December 31, 2011 | $1,775 at June 30, 2011 |
| Total liabilities | $74,021 at December 31, 2011 | $10,692 at June 30, 2011 |
| Stockholders’ deficiency | $70,768 at December 31, 2011 | $6,417 at June 30, 2011 |
Current assets were $3,253, including $2,500 prepaid expense. Liabilities included $61,198 accounts payable, a $9,500 note payable, and $3,323 deferred revenue. The note consisted of three unsecured, non-interest-bearing loans due on demand. No interest or income taxes were paid. Gross profit and operating margins are not separately provided; with no quarterly revenue and reported losses, meaningful revenue-based margins are not clear.
Material changes versus comparable periods
- Six-month revenue increased from $0 to $1,677, while net loss rose from $55,546 to $66,951.
- Professional fees increased to $62,097 from $49,425 for the comparable six months.
- Operating cash outflow improved to $10,522 from $48,693, partly alongside a $50,506 increase in accounts payable and accrued expenses and $3,323 of deferred revenue.
- Cash fell by $1,022 during the six months; the company obtained $9,500 in demand loans and reported no stock issuance proceeds in the period.
Outlook, risks, and unusual items
- Management stated that available cash and working capital were inadequate for the next 12 months and that additional debt or equity funding was needed. It warned that plans could be suspended or stopped if funding could not be raised.
- The filing reports substantial doubt about the company’s ability to continue as a going concern, citing minimal operations, $149,672 cumulative operating cash use, $252,693 cumulative net losses, and a working-capital and stockholders’ deficiency. Management said it was seeking funding and implementing strategic plans; no quantified outlook or committed financing was provided.
- Discussions with Organovo, Inc. about a possible business combination had no agreed definitive terms, and neither party was bound to proceed. The company said it might change its name again if the transaction did not proceed.
- A proposed 10.59135-for-1 forward stock split had not been approved by FINRA as of January 17, 2012 and had not been completed. The financial statements did not retroactively reflect the proposed split.
- All six-month 2011 revenue came from one customer. The company said it did not expect further material payments under its impaired licensing agreement; a $27,723 impairment had been recorded in the year ended June 30, 2011.
- A consulting agreement required payments of $5,000 per month and remained in effect unless canceled. The filing reports no legal proceedings and no off-balance-sheet arrangements.
- Management concluded disclosure controls were effective and reported no material changes to internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the issuer identity: the supplied metadata names Vivosim Labs, Inc., but the filing names Organovo Holdings, Inc.
- Verify whether the Organovo, Inc. business combination advanced, and whether the company’s name, business, and trading symbol subsequently changed.
- Check whether FINRA approved or the company completed the proposed stock split, and how share counts were adjusted.
- Review subsequent financing, repayment terms for the demand loans, accounts-payable settlement, and liquidity after December 31, 2011.
- Assess the basis for the $1,677 revenue, its single-customer concentration, and the status of the licensing agreement and monthly consulting commitment.