Filing summary
Filing identity: The request identifies Ridenow Group, Inc., but the supplied Form 10-Q is for Smart Server, Inc. The filing does not mention Ridenow Group. Confirm the correct issuer before relying on this summary.
Business context and reporting period
The unaudited quarterly report covers the three months ended February 28, 2015; the balance sheet compares February 28, 2015 with November 30, 2014. Smart Server describes itself as a development-stage company developing a mobile payment application for restaurant, bar, and club customers. It reported no revenue, no customers, and no market-ready app.
Financial performance and position
| Metric | Period / amount |
|---|---|
| Revenue | $0 for the quarter; the company also reported no revenue since inception. |
| Operating expenses | $12,991, versus $27,275 in the prior-year quarter. |
| Net loss | $14,544, versus $27,998 in the prior-year quarter. Basic loss per share was reported as $0.00, versus $0.01. |
| Cash from operations | Cash used was $316, versus $22,450 used in the prior-year quarter. |
| Cash from financing | $5,000 provided, versus $30,000 in the prior-year quarter; no investing cash flow. |
| Cash | $10,879 at February 28, 2015, versus $6,195 at November 30, 2014. The cash flow statement reports $9,636 at February 28, 2014. |
| Assets and liabilities | Total assets were $15,154; total liabilities were $128,558. |
| Debt and accrued interest | Related-party notes totaled $105,000, with $50,000 classified current and $55,000 long term; accrued related-party interest was $6,579. Notes bear 6% interest. |
| Stockholders' deficit | $113,404, compared with $98,860 at November 30, 2014. |
Margins are not meaningful because the company had no revenue. Cash and current assets were $10,879 against current liabilities of $66,979, a working-capital deficit of $56,100.
Changes versus the prior comparable period
- Quarterly net loss narrowed by $13,454, primarily alongside lower operating expenses, including reduced professional fees.
- Operating cash use fell to $316 from $22,450, while financing proceeds fell to $5,000 from $30,000.
- At quarter-end, cash exceeded the November 30, 2014 balance by $4,684; current related-party debt increased from $20,000 to $50,000.
Outlook, risks, and unusual items
- Management said available cash would not support operations for the next 12 months without additional funding. The company was contemplating an equity or debt offering, but reported no financing agreements or arrangements in place or under negotiation.
- The filing identifies substantial doubt about the company's ability to continue as a going concern. Continued operations depend on raising capital and eventually generating significant revenue; failure to obtain funding could force the company to cease operations.
- Management hoped to begin generating revenue within 12 months, but gave no revenue or earnings guidance and offered no assurance of success. It said the website was not fully operational and targeted a more advanced website launch near the end of the second quarter of 2015.
- Key risks include product-development and market-acceptance uncertainty, competition, limited management resources, technology and security risks, financing needs, and limited stock liquidity. The filing also identifies the company as a shell company and a penny stock.
- On April 1, 2015, the company executed an additional $5,000 related-party note at 6% interest, due April 1, 2017. The filing says there were no material subsequent events to disclose, while separately describing this note.
- No material legal proceedings or material off-balance-sheet arrangements were reported. Management concluded disclosure controls were effective and reported no material change in internal control during the quarter.
Important facts for investors to verify
- Whether this Smart Server, Inc. filing is actually the intended filing for Ridenow Group, Inc.
- The accuracy of related-party debt amounts and classifications, maturity dates, and the additional April 2015 borrowing; the filing's MD&A cites $110,000 of notes, while the February 28 balance sheet and note disclosure show $105,000.
- The going-concern disclosure contains an apparent period error: it refers to a $14,544 loss for the three months ended August 31, 2014, although the financial statements report that amount for the three months ended February 28, 2015.
- The common-stock disclosure reports 5,500,000 shares outstanding at February 28, 2015 and 5,000,000 at November 30, 2014, but the common-stock balance is shown as $5,500 at both dates. Verify share issuance and equity accounting; the filing reports 5,500,000 shares outstanding on April 14, 2015.
- Whether the company can secure enough financing to complete the app and website, and whether its stated product and revenue plans are achievable.