UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2015
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-161943
SPORT ENDURANCE, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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26-2754069
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|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1890 South 3850 West, Salt Lake City, Utah 84104
(Address of principal executive offices) (Zip Code)
(801) 673-5531
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 37,581,903 shares of $0.001 par value common stock outstanding as of April 14, 2015.
SPORT ENDURANCE, INC.
FORM 10-Q
Quarterly Period Ended February 28, 2015
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Page
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3
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PART I. FINANCIAL INFORMATION
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Item 1.
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4
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4
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5
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6
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7
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8
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Item 2.
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14
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Item 3.
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18
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Item 4.
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18
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PART II. OTHER INFORMATION
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Item 1.
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19
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Item 1A.
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19
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Item 2.
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19
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Item 3.
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19
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Item 4.
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19
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Item 5.
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19
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Item 6.
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19
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20
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Unless otherwise noted, references in this registration statement to "Sport Endurance, Inc." the "Company," "we," "our" or "us" means Sport Endurance, Inc.
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer. You should, however, consult further disclosures we make in future filings of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
AVAILABLE INFORMATION
We file annual, quarterly and special reports and other information with the SEC that can be inspected and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company’s filings are also available through the SEC’s Electronic Data Gathering Analysis and Retrieval System which is publicly available through the SEC’s website (www.sec.gov). Copies of such materials may also be obtained by mail from the public reference section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed rates.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
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February 28,
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August 31,
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2015
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|
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2014
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ASSETS
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Current assets
|
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|
|
|
|
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| |
|
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|
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Cash and cash equivalents
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$ |
- |
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$ |
- |
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Total current assets
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|
- |
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|
- |
|
| |
|
|
|
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|
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Equipment, net of accumulated depreciation
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3,284 |
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4,380 |
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| |
|
|
|
|
|
|
|
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Total Assets
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3,284 |
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4,380 |
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LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
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Current liabilities
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|
|
|
|
|
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|
|
|
|
|
|
|
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Accounts payable
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22,446 |
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21,733 |
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Convertible debt - related party
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|
27,111 |
|
|
|
15,668 |
|
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Total current liabilities
|
|
|
49,557 |
|
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|
37,401 |
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| |
|
|
|
|
|
|
|
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Commitments and contingencies
|
|
|
- |
|
|
|
- |
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Stockholders' equity (deficit)
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|
|
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|
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|
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Preferred stock, $0.001 par value, 20,000,000 shares authorized, 1,000 shares issued and outstanding as of February 28, 2015 and August 31, 2014
|
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1 |
|
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|
1 |
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Common stock, $0.001 par value, 580,000,000 shares authorized, 37,581,903 and 37,581,903 shares issued and outstanding as of February 28, 2015 and August 31, 2014
|
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37,582 |
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37,582 |
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Additional paid-in capital
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323,433 |
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311,180 |
|
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Deficit accumulated during the development stage
|
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(407,289 |
) |
|
|
(381,784 |
) |
|
Total (deficiency in) stockholders' equity
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|
(46,273 |
) |
|
|
(33,021 |
) |
| |
|
|
|
|
|
|
|
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Total liabilities and (deficiency in) stockholders' equity
|
|
$ |
3,284 |
|
|
$ |
4,380 |
|
See accompanying notes to these financial statements.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
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|
For the Three
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For the Three
|
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For the Six
|
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For the Six
|
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|
January 3, 2001
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|
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Months Ended
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Months Ended
|
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|
Months Ended
|
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Months Ended
|
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(inception) to
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|
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February 28,
|
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February 28,
|
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February 28,
|
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February 28,
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February 28,
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2015
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2014
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2015
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2014
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2015
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Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
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|
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|
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|
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|
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Operating expenses:
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General and administrative
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1,675 |
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1,724 |
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3,383 |
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3,601 |
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50,602 |
|
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Professional fees
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|
8,773 |
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3,201 |
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|
8,773 |
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|
|
9,245 |
|
|
|
208,775 |
|
|
Depreciation
|
|
|
548 |
|
|
|
1,048 |
|
|
|
1,096 |
|
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2,096 |
|
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|
22,056 |
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| |
|
|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
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Total operating expenses
|
|
|
10,996 |
|
|
|
5,973 |
|
|
|
13,252 |
|
|
|
14,942 |
|
|
|
281,433 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Loss
|
|
|
(10,996 |
) |
|
|
(5,973 |
) |
|
|
(13,252 |
) |
|
|
(14,942 |
) |
|
|
(281,433 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(7,752 |
) |
|
|
(7,859 |
) |
|
|
(12,253 |
) |
|
|
(13,283 |
) |
|
|
(112,856 |
) |
|
Offering costs
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,000 |
) |
|
Total other expense
|
|
|
(7,752 |
) |
|
|
(7,859 |
) |
|
|
(12,253 |
) |
|
|
(13,283 |
) |
|
|
(125,856 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(18,748 |
) |
|
|
(13,832 |
) |
|
|
(25,505 |
) |
|
|
(28,225 |
) |
|
|
(407,289 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(18,748 |
) |
|
$ |
(13,832 |
) |
|
$ |
(25,505 |
) |
|
$ |
(28,225 |
) |
|
$ |
(407,289 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - basic
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic (post-reverse split)
|
|
|
37,581,903 |
|
|
|
31,358,903 |
|
|
|
37,581,903 |
|
|
|
31,358,903 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted (post-reverse split)
|
|
|
37,581,903 |
|
|
|
31,358,903 |
|
|
|
37,581,903 |
|
|
|
31,358,903 |
|
|
|
|
|
See accompanying notes to these financial statements.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Deficit)
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Accumulated
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Stock
|
|
|
During
|
|
|
Stockholders'
|
|
| |
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Subscriptions
|
|
|
Development
|
|
|
Equity
|
|
| |
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Stage
|
|
|
(Deficit)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to founder at $1 per share, of which $500 was paid in cash
|
|
|
- |
|
|
$ |
- |
|
|
|
1,200 |
|
|
$ |
1 |
|
|
$ |
1,199 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,200 |
|
|
Sale of common stock for cash
|
|
|
- |
|
|
|
- |
|
|
|
3,000 |
|
|
|
3 |
|
|
|
14,997 |
|
|
|
- |
|
|
|
- |
|
|
|
15,000 |
|
|
Net loss for the year ended August 31, 2001
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(16,200 |
) |
|
|
(16,200 |
) |
|
Balance, August 31, 2001
|
|
|
- |
|
|
|
- |
|
|
|
4,200 |
|
|
|
4 |
|
|
|
16,196 |
|
|
|
- |
|
|
|
(16,200 |
) |
|
|
- |
|
|
Issuance of common stock for professional fees
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
|
25 |
|
|
|
124,975 |
|
|
|
- |
|
|
|
- |
|
|
|
125,000 |
|
|
Net loss for the year ended August 31, 2002
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(125,000 |
) |
|
|
(125,000 |
) |
|
Balance, August 31, 2002
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Net loss for the year ended August 31, 2003
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2003
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Net loss for the year ended August 31, 2004
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2004
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Net loss for the year ended August 31, 2005
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2005
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Net loss for the year ended August 31, 2006
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2006
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Net loss for the year ended August 31, 2007
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2007
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Net loss for the year ended August 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
29,200 |
|
|
|
29 |
|
|
|
141,171 |
|
|
|
- |
|
|
|
(141,200 |
) |
|
|
- |
|
|
Issuance of convertible preferred stock for cash
|
|
|
2,000 |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
4,998 |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
|
Issuance of founder's shares in exchange for contributed equipment at $1 per share
|
|
|
- |
|
|
|
- |
|
|
|
25,340 |
|
|
|
25 |
|
|
|
25,315 |
|
|
|
- |
|
|
|
- |
|
|
|
25,340 |
|
|
Common stock subscription receivable issued to founder at $1 per share
|
|
|
- |
|
|
|
- |
|
|
|
8,980 |
|
|
|
9 |
|
|
|
8,971 |
|
|
|
(8,980 |
) |
|
|
- |
|
|
|
- |
|
|
Previously issued common stock cancelled
|
|
|
- |
|
|
|
- |
|
|
|
(6,320 |
) |
|
|
(6 |
) |
|
|
6 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net loss for the year ended August 31, 2009
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Balance, August 31, 2009
|
|
|
2,000 |
|
|
|
2 |
|
|
|
57,200 |
|
|
|
57 |
|
|
|
180,461 |
|
|
|
(8,980 |
) |
|
|
(141,200 |
) |
|
|
30,340 |
|
|
Sale of common stock for cash
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,980 |
|
|
|
- |
|
|
|
8,980 |
|
|
Net loss for the year ended August 31, 2010
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(38,421 |
) |
|
|
(38,421 |
) |
|
Balance, August 31, 2010
|
|
|
2,000 |
|
|
|
2 |
|
|
|
57,200 |
|
|
|
57 |
|
|
|
180,461 |
|
|
|
- |
|
|
|
(179,621 |
) |
|
|
899 |
|
|
Conversion of preferred stock into common, 3:1
|
|
|
(1,000 |
) |
|
|
(1 |
) |
|
|
3,000 |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net loss for the year ended August 31, 2011
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(40,847 |
) |
|
|
(40,847 |
) |
|
Balance, August 31, 2011
|
|
|
1,000 |
|
|
|
1 |
|
|
|
60,200 |
|
|
|
60 |
|
|
|
180,459 |
|
|
|
- |
|
|
|
(220,468 |
) |
|
|
(39,948 |
) |
|
Net loss for the year ended August 31, 2012
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15,909 |
) |
|
|
(15,909 |
) |
|
Balance, August 31, 2012
|
|
|
1,000 |
|
|
|
1 |
|
|
|
60,200 |
|
|
|
60 |
|
|
|
180,459 |
|
|
|
- |
|
|
|
(236,377 |
) |
|
|
(55,857 |
) |
|
Stock issued for fractional shares
|
|
|
- |
|
|
|
- |
|
|
|
203 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Imputed interest on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,170 |
|
|
|
- |
|
|
|
- |
|
|
|
1,170 |
|
|
Discount related to beneficial conversion feature on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
68,068 |
|
|
|
- |
|
|
|
- |
|
|
|
68,068 |
|
|
Net loss for the year ended August 31, 2013
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(94,170 |
) |
|
|
(94,170 |
) |
|
Balance, August 31, 2013
|
|
|
1,000 |
|
|
|
1 |
|
|
|
60,403 |
|
|
|
60 |
|
|
|
249,697 |
|
|
|
- |
|
|
|
(330,547 |
) |
|
|
(80,789 |
) |
|
Stock issued for conversion of debt
|
|
|
- |
|
|
|
- |
|
|
|
37,521,500 |
|
|
|
37,522 |
|
|
|
37,522 |
|
|
|
- |
|
|
|
- |
|
|
|
75,043 |
|
|
Imputed interest on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,319 |
|
|
|
- |
|
|
|
- |
|
|
|
1,319 |
|
|
Discount related to beneficial conversion feature on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,643 |
|
|
|
- |
|
|
|
- |
|
|
|
22,643 |
|
|
Net loss for the year ended August 31, 2014
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(51,237 |
) |
|
|
(51,237 |
) |
|
Balance, August 31, 2014
|
|
|
1,000 |
|
|
|
1 |
|
|
|
37,581,903 |
|
|
|
37,582 |
|
|
|
311,180 |
|
|
|
- |
|
|
|
(381,784 |
) |
|
|
(33,021 |
) |
|
Imputed interest on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
810 |
|
|
|
- |
|
|
|
- |
|
|
|
810 |
|
|
Discount related to beneficial conversion feature on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,443 |
|
|
|
- |
|
|
|
- |
|
|
|
11,443 |
|
|
Net loss for the six months ended February 28, 2015
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(25,505 |
) |
|
|
(25,505 |
) |
|
Balance, February 28, 2015
|
|
|
1,000 |
|
|
|
1 |
|
|
|
37,581,903 |
|
|
|
37,582 |
|
|
|
323,433 |
|
|
|
- |
|
|
|
(407,289 |
) |
|
|
(46,273 |
) |
See accompanying notes to these financial statements.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
|
For the Six
|
|
|
For the Six
|
|
|
January 3, 2001
|
|
| |
|
Months Ended
|
|
|
Months Ended
|
|
|
(inception) to
|
|
| |
|
February 28,
|
|
|
February 28,
|
|
|
February 28,
|
|
| |
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(25,505 |
) |
|
$ |
(28,225 |
) |
|
$ |
(407,289 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,096 |
|
|
|
2,096 |
|
|
|
22,056 |
|
|
Shares issued for services
|
|
|
- |
|
|
|
- |
|
|
|
125,000 |
|
|
Amortization of debt discount
|
|
|
11,443 |
|
|
|
12,818 |
|
|
|
102,154 |
|
|
Imputed interest
|
|
|
810 |
|
|
|
465 |
|
|
|
3,299 |
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
713 |
|
|
|
50 |
|
|
|
22,446 |
|
|
Accrued interest, related party
|
|
|
- |
|
|
|
- |
|
|
|
7,403 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(11,443 |
) |
|
|
(12,796 |
) |
|
|
(124,931 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from (repayments of) bank overdrafts
|
|
|
- |
|
|
|
(22 |
) |
|
|
- |
|
|
Proceeds from sale of common stock and preferred stock
|
|
|
- |
|
|
|
- |
|
|
|
30,180 |
|
|
Proceeds from officer, loans, related party
|
|
|
- |
|
|
|
- |
|
|
|
43,537 |
|
|
Proceeds from convertible debt - related party
|
|
|
11,443 |
|
|
|
12,818 |
|
|
|
51,214 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
11,443 |
|
|
|
12,796 |
|
|
|
124,931 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Income taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount on beneficial conversion feature
|
|
|
11,443 |
|
|
|
12,818 |
|
|
|
102,154 |
|
|
Stock issued for conversion of debt
|
|
|
- |
|
|
|
62,597 |
|
|
|
75,043 |
|
|
Reclassification of notes payable to convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
62,597 |
|
|
Value of common stock issued for services
|
|
|
- |
|
|
|
- |
|
|
|
125,000 |
|
|
Value of common stock issued for equipment
|
|
|
- |
|
|
|
- |
|
|
|
25,340 |
|
|
Non-cash preferred stock conversion
|
|
|
- |
|
|
|
- |
|
|
|
3,000 |
|
See accompanying notes to these financial statements.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Note 1 – Nature of Business and Significant Accounting Policies
Nature of business
Sport Endurance, Inc. (“the Company”) was incorporated as Cayenne Construction, Inc. in the state of Nevada on January 3, 2001 (“Inception”). The Company was formed to be an independent service provider of ready-mix concrete, whereby management was to arrange purchases of ready-mixed concrete by small contractors and customers on a fee basis. The Company ceased operations in 2002 and was revived in 2009 with a name change to, “Sport Endurance, Inc.” on August 6, 2009. The Company intends to manufacture and distribute a line of sports energy drinks.
On October 31, 2012 the shareholders of the Company voted to increase the authorized common shares of the Company’s common stock from 480,000,000 authorized shares of common stock to 580,000,000 authorized shares of common stock. As a result of this vote, the Company filed an amendment to its Articles of Incorporation to reflect this change.
On November 23, 2012, we effected a 1,000 for 1 reverse stock split, decreasing the issued and outstanding shares common shares from 60,200,000 to 60,200 shares and decreasing the issued and outstanding preferred shares from 1,000,000 to 1,000.
Basis of presentation
The unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for the fiscal year ending August 31, 2015. It is suggested that these interim condensed financial statements be read in conjunction with the Form 10-K.
The Company has adopted a fiscal year end of August 31st.
Development Stage Company
The Company is considered to be in the development stage as defined by FASB ASC 915-10-05. This standard requires companies to report their operations, shareholders equity and cash flows from inception through the reporting date. The Company will continue to be reported as a development stage entity until, among other factors, revenues are generated from management’s intended operations. Management has provided financial data since inception (January 3, 2001).
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk. The Company had cash and cash equivalents of $0 and $0 at February 28, 2015 and August 31, 2014.
Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.
Sport Endurance, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis.
Basic and Diluted Loss Per Share
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure.
Recently Issued Accounting Pronouncements
In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under International Financial Reporting Standards. Like ASU 2011-11, the amendments in this update were effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on the Company’s financial position or results of operations.
In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. The amendments apply to all public and private companies that report items of other comprehensive income. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. The adoption of ASU 2013-02 did not have a material impact on our financial position or results of operations as the Company maintains no items of comprehensive income.
On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. The impact on the Company’s financial statements of adopting ASU 2014-09 is being assessed by management.
In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification™. A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For public business entities, the presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The impact on the Company’s financial statements of adopting ASU 2014-10 is being assessed by management.
Sport Endurance, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
In June 2014, the FASB issued the FASB ASU2014-12 “Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”). The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The update requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent
the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of ASU 2014-12 is not expected to have a material impact on the Company’s financial statements.
In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40).” The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and is still assessing the impact on the financial statements.
Note 2 – Going Concern
As shown in the accompanying financial statements, the Company has incurred recurring net losses from operations resulting in an accumulated deficit of $407,289, and a working capital deficit of $49,557 as of February 28, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new ventures to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful, therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 – Related Party Transactions
Notes Payable
From time to time the Company has received loans from the former CEO, Robert Timothy, to fund operations. The total outstanding balance of the unsecured, demand notes, bearing interest at 8% was $5,445 and $5,445 at May 31, 2013 and August 31, 2012, respectively. Accrued interest of $1,576 and $1,251 was outstanding as of May 31, 2013 and August 31, 2012, respectively.
From time to time the Company has received loans from the Company’s CEO, Gerald Ricks, to fund operations. The total outstanding balance of the unsecured, demand notes, bearing interest at 8% was $22,519 and $22,519 at May 31, 2013 and August 31, 2012, respectively. Accrued interest of $3,024 and $1,677 was outstanding as of May 31, 2013 and August 31, 2012, respectively.
From time to time the Company has received loans from a major shareholder, BK Consulting, to fund operations. The total outstanding balance of the unsecured, demand notes, bearing interest at 8% was $27,230 and $15,573 at May 31, 2013 and August 31, 2012. Accrued interest of $2,803 and $1,625 was outstanding as of May 31, 2013 and August 31, 2012, respectively.
On June 3, 2013 the Company amended the terms of the above notes whereby the outstanding principal in the amount of $55,194 and any accrued interest as of May 31, 2013 would be convertible into the Company’s common stock at a rate of $0.002 per share at the holder’s discretion. As of June 3, 2013 the notes no longer bear interest. As a result the Company reclassified $55,194 of notes payable and $7,403 of accrued interest to convertible debt during the three months ended August 31, 2013.
Sport Endurance, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Conversion of Notes Payable
During the year ended August 31, 2014, the Company converted $25,543 of convertible debt due to the Company’s CEO, Gerald Ricks, into 12,771,500 shares of common stock.
During the year ended August 31, 2014, the Company converted $7,021 of convertible debt due to the Company’s former CEO, Robert Timothy, into 3,510,500 shares of common stock.
During the year ended August 31, 2014, the Company converted $30,033 of convertible debt due to the Company’s major shareholder, BK Consulting, into 15,016,500 shares of common stock.
During the year ended August 31, 2014, the Company’s major shareholder, BK Consulting sold convertible notes to five unrelated third parties who subsequently converted the note into common stock. The Company converted $12,446 of convertible debt into 6,223,000 shares of common stock.
The above note conversions were converted within the conversion terms. The Company recorded no gain or loss related to the conversion of these notes.
Convertible Notes Payable
During the year ended August 31, 2013 the Company issued convertible promissory notes for aggregate proceeds in the amount of $5,471. The loans are non-interest bearing and convertible at the holder’s discretion into Common Stock at a price of $0.002 per share.
During the year ended August 31, 2014 the Company issued convertible promissory notes for aggregate proceeds in the amount of $22,643. The loans are non-interest bearing and convertible at the holder’s discretion into Common Stock at a price of $0.002 per share.
On November 3, 2014 the Company issued an unsecured convertible loan of $2,670.25, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from BK Consulting, to fund operations.
On November 18, 2014 the Company issued an unsecured convertible loan of $1,500, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from BK Consulting, to fund operations.
On December 4, 2014 the Company issued an unsecured convertible loan of $2,000, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from BK Consulting, to fund operations.
On January 2, 2015 the Company issued an unsecured convertible loan of $2,073, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from BK Consulting, to fund operations.
On January 14, 2015 the Company issued an unsecured convertible loan of $1,250, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from BK Consulting, to fund operations.
On February 2, 2015 the Company issued an unsecured convertible loan of $1,950, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from BK Consulting, to fund operations.
As of February 28, 2015 and August 31, 2014 the balance of the convertible debt was $27,111 and $15,668. The Company recorded imputed interest at a rate of 8% on outstanding convertible notes in the amount of $478 and $313 during the three months ended February 28, 2014 and 2013, respectively and $810 and $465 during the six months ended February 28, 2015 and 2014, respectively.
Sport Endurance, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Discounts on Convertible Notes Payable
The Company calculates any beneficial conversion feature embedded in its convertible notes via the intrinsic value method. The conversion feature was considered a discount to the notes, to the extent the aggregate value of the conversion feature did not exceed the face value of the notes. These discounts are amortized to interest expense through earlier of the term or conversion of the notes. During six three months ended February 28, 2015 and 2014 the Company recorded debt discounts in the amount of $11,443 and $12,818. During the six months ended February 28, 2015 and 2014 the Company amortized debt discounts to interest expense in the aggregate amount of $11,443 and $12,818.
Change in Management
On December 15, 2010, the former CEO, Robert Timothy, resigned as from the Board of Directors and his position as CEO, and appointed Gerald Ricks as the Chairman of the Board of Directors and CEO.
On December 30, 2010, the Board of Directors dismissed Ronald Schurman as Secretary and Treasurer and appointed Vincent Kelly to the Board and positions of Secretary and Treasurer.
On December 31, 2010, the Board of Directors appointed James Hughes to the Board of Directors.
Note 4 – Equipment
Equipment consists of the following:
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February 28,
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August 31,
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Less accumulated depreciation
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Depreciation expense totaled $548 and $1,048 for the three months ended February 28, 2015 and 2014, respectively and $1,096 and $2,096 for the six months ended February 28, 2015 and 2014, respectively.
Note 5 – Stockholders’ Equity
On June 7, 2010, the shareholders of the Company voted to increase the authorized common shares of the Company’s common stock from 90,000,000 authorized shares of common stock to 480,000,000 authorized shares of common stock. Additionally, the shareholders voted to increase the authorized shares of the Company’s preferred stock from 10,000,000 authorized shares to 20,000,000 authorized shares of preferred stock. As a result of this vote, the Company filed an amendment to its Articles of Incorporation to reflect this change.
On October 31, 2012 the shareholders of the Company voted to increase the authorized common shares of the Company’s common stock from 480,000,000 authorized shares of common stock to 580,000,000 authorized shares of common stock. As a result of this vote, the Company filed an amendment to its Articles of Incorporation to reflect this change.
On November 23, 2012, we effected a 1,000 for 1 reverse stock split, decreasing the issued and outstanding shares common shares from 60,200,000 to 60,200 shares and decreasing the issued and outstanding preferred shares from 1,000,000 to 1,000. All share amounts throughout this report have been retroactively adjusted for all periods to reflect this stock split.
Preferred stock
On August 15, 2009, the Company issued a total of 2,000 shares of preferred stock to two individual investors in a private placement under Rule 506 of the Securities Act of 1933 for $5,000 in cash, or $2.50 per share.
On October 12, 2010, a preferred stock shareholder elected to convert 1,000 shares of preferred stock in exchange for 3,000 shares of common stock.
Sport Endurance, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
The Company is authorized to issue 20,000,000 shares of $0.001 par value preferred stock as of February 28, 2015 and August 31, 2014. The Company has 1,000 shares of preferred stock issued and outstanding as of February 28, 2015 and August 31, 2014.
Common stock
No shares of common stock were issued during the six months ended February 28, 2015.
During the year ended August 31, 2014, the Company issued 12,771,500 shares of common stock at $0.002 for conversion of debt due to the Company’s CEO, Gerald Ricks, valued at $25,543.
During the year ended August 31, 2014, the Company issued 3,510,500 shares of common stock at $0.002 for conversion of debt due to the Company’s former CEO, Robert Timothy, valued at $7,021.
During the year ended August 31, 2014, the Company issued 15,016,500 shares of common stock at $0.002 for conversion of debt due to the Company’s major shareholder, BK Consulting, valued at $30,033.
During the year ended August 31, 2014, the Company issued 6,223,000 shares of common stock at $0.002 for conversion of debt due to third parties, valued at $12,446.
During the year ended August 31, 2013 the Company issued an aggregate of 203 shares of common stock to shareholders for fractional shares from the November 23, 2012 reverse stock-split noted above.
As noted above, on October 12, 2010, a preferred stock shareholder elected to convert 1,000 shares of preferred stock in exchange for 3,000 shares of common stock.
On August 20, 2009, the Company issued 8,980 founder’s shares of common stock in exchange for a subscription receivable of $8,980. The Company received proceeds of $8,980 at various dates between September 15, 2009 and May 13, 2010.
On August 20, 2009, the Company issued 25,340 founder’s shares of common stock in exchange for contributed equipment with a cost basis of $25,340. The cost basis approximated the fair market value of the equipment.
On August 20, 2009, the Company cancelled and returned to treasury 6,320 shares of common stock previously issued to founders. No consideration was provided and the total par value of $6,320 was recorded as additional paid-in capital.
On February 10, 2002, the Company issued 25,000 shares to the Company President for professional services rendered. The fair value of those shares was $125,000 on the grant date.
The Company issued a total of 3,000 shares of its $0.001 par value common stock during May 2001 in a private placement under Rule 506 of the Securities Act of 1933 for $15,000 in cash, or $5 per share to a total of nineteen individual investors. Due to a lack of operations, management believes the purchase price of $5 per share is representative of fair value.
On January 10, 2001 the Company issued 1,200 shares of common stock to the founder of the Company in exchange for proceeds of $500. Since the par value of the Company’s common stock is the legal minimum value, management recorded compensation for the difference between the amount paid of $500 and the minimum value of $1,200, or $700 in the accompanying statement of operations.
The Company is authorized to issue 580,000,000 shares of $0.001 par value common stock as of February 28, 2015 and August 31, 2014. The Company has 37,581,903 and 37,581,903 shares of common stock issued and outstanding as of February 28, 2015 and August 31, 2014.
Note 6 – Subsequent Events
On March 4, 2015 the Company issued an unsecured convertible loan of $2,275, non-interest bearing, due on demand and convertible into Common Stock at a rate $0.002 per share, from a major shareholder, BK Consulting, to fund operations. Due to the beneficial conversion feature the Company recorded a discount on the convertible note in the amount of $2,275.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW AND OUTLOOK
Sport Endurance, Inc. (“Sport Endurance”) is a Nevada corporation that intends to manufacture and distribute a line of sports energy drinks. Production and distribution has not yet commenced, as such, the Company is considered to be in the development stage.
For the six months ended February 28, 2015, we had a net loss of $25,505 as compared to a net loss of $28,225 for the six months ended February 28, 2014. Our accumulated deficit as of February 28, 2015 was $407,289. These conditions raise substantial doubt about our ability to continue as a going concern over the next twelve months.
Results of Operations for the Six Months Ended February 28, 2015 and 2014
Revenues
The Company had no revenues during the six month periods ending February 28, 2015 and 2014.
General and administrative expenses
General and administrative expenses were $3,383 for the six months ended February 28, 2015 compared to $3,601 for the six months ended February 28, 2014, a decrease of $218. The decrease in general and administrative expense for the six months ended February 28, 2015 compared to the six months ended February 28, 2014 was due primarily to a decrease in stock servicing costs and bank service charges.
Professional fees
Professional fees were $8,773 for the six months ended February 28, 2015 compared to $9,245 for the six months ended February 28, 2014, a decrease of $472. The decrease in professional fees for the six months ended February 28, 2015 compared to the six months ended February 28, 2015 was due primarily to the decrease in accounting and audit fees during this period as compared to the prior year.
Depreciation
Depreciation expense for the six months ended February 28, 2015 totaled $1,096 compared to $2,096 for the six months ended February 28, 2014, a decrease of $1,000. The decrease in depreciation was primarily due to fully depreciating certain office equipment.
Interest expense
Interest expense for the six months ended February 28, 2015 was $12,253 compared to $13,283 for the six months ended February 28, 2014, a decrease of $1,030. Interest expense for the six months ended February 28, 2015 is comprised of $11,443 from the discount on convertible debt from the beneficial conversion feature and $810 of imputed interest on convertible debt as compared to $12,818 from the discount on convertible debt from the beneficial conversion feature and $465 in imputed interest during the six months ended February 28, 2014.
Net loss
For the reasons above, our net loss for the six months ended February 28, 2015 was $25,505 compared to $28,225 for the six months ended February 28, 2014, a decrease of $2,720 or approximately (10%).
Results of Operations for the Three Months Ended February 28, 2015 and 2014
Revenues
The Company had no revenues during the three month periods ending February 28, 2015 and 2014.
General and administrative expenses
General and administrative expenses were $1,675 for the three months ended February 28, 2015 compared to $1,724 for the three months ended February 28, 2014, a decrease of $49. The decrease in general and administrative expense for the three months ended February 28, 2015 compared to the three months ended February 28, 2014 was due primarily to a decrease in stock servicing costs and bank service charges.
Professional fees
Professional fees were $8,773 for the three months ended February 28, 2015 compared to $3,201 for the three months ended February 28, 2014, an increase of $5,572. The increase in professional fees for the three months ended February 28, 2015 compared to the three months ended February 28, 2014 was due primarily to an increase in accounting and audit fees related to our 10-K recognized during our second quarter.
Depreciation
Depreciation expense for the three months ended February 28, 2015 totaled $548 compared to $1,048 for the three months ended February 28, 2014, a decrease of $500. The decrease in depreciation was primarily due to fully depreciating certain office equipment. We anticipate our quarterly depreciation expense to continue to be $548 for the near term.
Interest expense
Interest expense for the three months ended February 28, 2015 was $7,752 compared to $7,859 for the three months ended February 28, 2014, a decrease of $107. Interest expense for the three months ended February 28, 2015 is comprised of $7,273 from the discount on convertible debt from the beneficial conversion feature and $478 of imputed interest on convertible debt as compared to $7,546 from the discount on convertible debt from the beneficial conversion feature and $313 in imputed interest during the three months ended February 28, 2014.
Net loss
For the reasons above, our net loss for the three months ended February 28, 2015 was $18,748 compared to $13,832 for the three months ended February 28, 2014, an increase of $4,916 or approximately (36%).
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital at February 28, 2015 compared to August 31, 2014.
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February 28,
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August 31,
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Working Capital (Deficit)
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While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and projected cash flow deficits from operations and development of alternative revenue sources. As of February 28, 2015, we had a working capital deficit of $49,557. Our poor financial condition raises substantial doubt about our ability to continue as a going concern and we have incurred losses since inception and may incur future losses. In the past, we have conducted private placements of equity shares and during the six months ended February 28, 2015 we did not receive any proceeds from private placements. During six months ended February 28, 2015, we received a total of $11,443 in unsecured convertible loans due on demand, non-interest bearing, from related parties. There is no guarantee that the related parties will be willing to commit any further loans to the Company at this time.
Should we not be able to continue to secure additional financing when needed, we may be required to slow down or suspend our growth or reduce the scope of our current operations, any of which would have a material adverse effect on our business.
Our future capital requirements will depend on many factors, including the development of our line of sport energy drinks; the cost and availability of third-party financing for development; and administrative and legal expenses.
We anticipate that we will incur operating losses in the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, an evolving and unpredictable business model; recognition of revenue sources; and the management of growth. To address these risks, we must, among other things, expand our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.
Satisfaction of our cash obligations for the next 12 months.
As of February 28, 2015, we had cash and cash equivalents of $0. Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, sale of shares of our common stock, third party financing, and/or traditional bank financing. We anticipate sales-generated income during that same period of time, but do not anticipate generating sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to secure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.
Going concern.
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $407,289 and a working capital deficit of $49,557 at February 28, 2015, and have reported negative cash flows from operations since inception. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months. The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.
Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance, however, that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our future operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.
Summary of product and research and development that we will perform for the term of our plan.
We are not anticipating significant research and development expenditures in the near future.
Expected purchase or sale of plant and significant equipment.
We do not anticipate the purchase or sale of any plant or significant equipment as such items are not required by us at this time.
Significant changes in the number of employees.
As of February 28, 2015, we had no employees, other than our non-paid CEO, Gerald Ricks. Currently, there are no organized labor agreements or union agreements and we do not anticipate any in the future.
Assuming we are able to pursue revenue through the commencement of sales of our sports energy drinks, we anticipate an increase of personnel and may need to hire employees. In the interim, we intend to use the services of independent consultants and contractors to perform various professional services when appropriate. We believe the use of third-party service providers may enhance our ability to control general and administrative expenses and operate efficiently.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that are material to investors.
Recently Issued Accounting Standards
In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under International Financial Reporting Standards. Like ASU 2011-11, the amendments in this update were effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on the Company’s financial position or results of operations.
In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. The amendments apply to all public and private companies that report items of other comprehensive income. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. The adoption of ASU 2013-02 did not have a material impact on our financial position or results of operations as the Company maintains no items of comprehensive income.
On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. The impact on the Company’s financial statements of adopting ASU 2014-09 is being assessed by management.
In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification™. A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For public business entities, the presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The impact on the Company’s financial statements of adopting ASU 2014-10 is being assessed by management.
In June 2014, the FASB issued the FASB ASU2014-12 “Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”). The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The update requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent
the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of ASU 2014-12 is not expected to have a material impact on the Company’s financial statements.
In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40).” The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and is still assessing the impact on the financial statements.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
This item is not applicable as we are currently considered a smaller reporting company.
Item 4. Controls and Procedures.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit pursuant to the requirements of the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, among other things, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer, Gerald Ricks, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on the evaluation, Mr. Ricks concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure, for the following reasons:
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The Company does not have an independent board of directors or audit committee or adequate segregation of duties;
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All of our financial reporting is carried out by our financial consultant;
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We do not have an independent body to oversee our internal controls over financial reporting and lack segregation of duties due to the limited nature and resources of the Company.
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We plan to rectify these weaknesses by implementing an independent board of directors and hiring additional accounting personnel once we have additional resources to do so.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of their property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.
There has been no change in the Company’s risk factors since the Company’s Annual Report on Form 10-K filed with the SEC on December 4, 2014.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
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Incorporated by reference
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Exhibit
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Exhibit Description
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Filed herewith
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Form
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Period ending
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Exhibit
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Filing date
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31.1
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X
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31.2
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X
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32.1
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X
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SPORT ENDURANCE, INC.
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Date: April 14, 2015
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By:
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/s/ Gerald Ricks
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Gerald Ricks
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President, Chief Executive Officer, Director
(Principal Executive Officer, Principal Financial Officer,
and Principal Accounting Officer)
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