Business Context and Reporting Period
This is an unaudited Form 10-Q for Lazex Inc., covering the three months ended July 31, 2018 (the first quarter of its fiscal year ending April 30, 2019). The company provides travel consulting and tour-guide services, including brewery tours in the Czech Republic. The request identifies AIRWA Inc., but the filing itself identifies the registrant as Lazex Inc.; confirm the filing is for the intended company.
Key Financial Metrics
| Metric | Three months ended July 31, 2018 | Three months ended July 31, 2017 |
|---|---|---|
| Revenue | $0 | $7,940 |
| Operating expenses | $6,517 | $10,410 |
| Net loss | $6,517 | $2,470 |
| Net cash used in operating activities | $4,066 | $7,827 |
| Investing cash flow | $0 | $(4,800) |
| Financing cash flow | $0 | $5,100 |
At July 31, 2018, cash was $16,716; total assets were $21,795; current liabilities were $5,014; and stockholders’ equity was $16,781. Working capital was $12,347, calculated from reported current assets of $17,361 less current liabilities. The company reported no revenue in the quarter, so a revenue margin is not meaningful. The filing reports no tax provision. Loss per share is shown as $0.00, rounded, with 6,155,000 weighted-average shares.
Related-party debt was $1,114, unchanged from April 30, 2018. It is non-interest-bearing, unsecured, due on demand, and not documented by a promissory note. Cash decreased by $4,066 during the quarter, from $20,782 to $16,716. No stock was issued during the quarter; 6,155,000 shares were outstanding as of September 14, 2018.
Material Changes Versus the Prior Comparable Period
- Revenue fell from $7,940 to zero; management attributed this to no tours being sold in the quarter.
- Operating expenses declined to $6,517 from $10,410, but net loss increased to $6,517 from $2,470 because revenue was absent.
- Operating cash use improved to $4,066 from $7,827. The prior-year quarter included $4,800 for software and $5,100 of stock-sale proceeds; neither investing nor financing cash flow occurred in the current quarter.
- Compared with April 30, 2018, cash declined by $4,066, total assets fell by $4,716, current liabilities rose by $1,801, and equity declined by $6,517.
Outlook, Risks, Contingencies, and Unusual Items
Management says existing working capital, further advances or debt instruments, and anticipated cash flow are expected to fund operations for the next 12 months, while also stating the company expects to need additional capital for long-term operating requirements. Potential funding sources include equity or debt issuance and loans from directors. Financing may not be available on acceptable terms, and equity or convertible-debt issuance could dilute shareholders or carry senior rights. The filing reports no bank credit facility.
The filing states there is substantial doubt about the company’s ability to continue as a going concern, citing its accumulated deficit of $11,319 and anticipated future losses. Continued operations depend on generating profitable operations and/or obtaining financing. Related-party support has no formal commitment. Management reported no material subsequent events and no material off-balance-sheet arrangements or known legal proceedings.
Management concluded disclosure controls and procedures were not effective at period-end; it reported no material changes in internal control over financial reporting during the quarter. The filing adopted ASC 606 effective May 1, 2018 and says adoption had no material impact. The statements report that the three months ended July 31, 2017 produced a net loss of $2,470, while the MD&A incorrectly calls the comparative result net income of $2,470; the financial statements show a loss.
Most Important Facts to Verify
- Whether this Lazex Inc. filing is actually the intended filing for AIRWA Inc.
- The comparative-period result: the financial statements show a $2,470 net loss, contrary to the MD&A wording.
- The company’s ability to finance operations and address the disclosed substantial doubt about going concern, given zero quarterly revenue and reliance on possible, uncommitted support or new financing.
- The effectiveness of disclosure controls and procedures and the accuracy of the filing’s inconsistent descriptions.