Filing and reporting period
The supplied filing is Spatializer Audio Laboratories, Inc.’s Form 10-K for the fiscal year ended December 31, 2011, filed March 7, 2012. It is not an Enveric Biosciences filing, and it reports annual results—not a standalone 2011 fourth quarter.
Spatializer sold substantially all operating assets in 2007 and has operated as a shell company since then, with no employees and no revenue-generating business.
Financial performance and position
| Metric | 2011 | 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $31,395 | $35,875 |
| Net loss | $33,380 | $39,441 |
| Cash used in operating activities | $30,346 | $40,666 |
| Cash and cash equivalents at year-end | $18,231 | $1,126 |
| Working capital at year-end | $4,555 | ($49,516) |
| Current liabilities at year-end | $17,895 | $50,642 |
There was no operating revenue, so a meaningful operating margin is not applicable. The filing reports no interest expense. At December 31, 2011, stockholder loans were zero; accounts payable and accrued liabilities were $17,895. The filing does not provide a clear debt balance beyond these liabilities.
Changes and financing
- Operating expenses decreased about 14% year over year, and the net loss narrowed by approximately $6,000.
- In August 2011, the company issued 5,642,000 shares at $0.0155 per share in transactions with two stockholder/officers: $67,451 of debt was converted to equity and Gregg Schneider invested a further $20,000. The company reported that the transactions eliminated negative net worth and provided working capital.
- Cash financing inflows included $20,000 from share issuance and $27,451 in stockholder advances; the $67,451 debt conversion was noncash. The company ended 2011 with stockholders’ equity of $4,555, compared with a deficit of $49,516 a year earlier.
Outlook, risks and unusual matters
- Management said the company has no source of revenue and cannot maintain liquidity consistently without a new business model and outside funding. No specific business plan, funding commitment, or forecast is provided.
- Management and the auditor identified substantial doubt about the company’s ability to continue as a going concern. The audited financial statements assume continued operations and include no adjustments for the uncertainty.
- Key stated risks include limited liquidity, dependence on stockholder support, uncertainty about the company’s future, and low trading volume and volatility in its OTC-traded stock.
- The company reported approximately $9.5 million of federal net operating loss carryforwards, subject to annual and ownership-change limitations; deferred tax assets were fully reserved.
- The auditor issued an unqualified opinion on the financial statements while highlighting the going-concern uncertainty. Management reported effective disclosure and financial-reporting controls; the auditor did not attest to internal control effectiveness.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing names Spatializer Audio Laboratories, Inc., not Enveric Biosciences, Inc.
- Assess how the company will fund ongoing expenses and whether any new operating business or external financing has materialized.
- Review the related-party equity and debt transactions, including the share issuance and the resulting ownership concentration.
- Verify current cash, accrued liabilities, trading status and share count, which may have changed since the filing date.
- Consider the auditor’s going-concern warning and the limitations of management’s unaudited internal-control assessment.