Better Choice Co Inc. - FORM 10-Q - January 29, 2016

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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 November 30, 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)
  
Nevada
26-2754069
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
  
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.
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company x
(Do not check if a smaller reporting company)
  
 
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: 77,575,303 shares of $0.001 par value common stock outstanding as of January 29, 2016.   
 
 
SPORT ENDURANCE, INC.
 
FORM 10-Q
Quarterly Period Ended November 30, 2015
 
TABLE OF CONTENTS

 
Page
 
   
 3
   
PART I. FINANCIAL INFORMATION
  
Item 1.
4
 
4
 
5
 
6
 
7
Item 2.
12
Item 3.
14
Item 4.
15
     
PART II. OTHER INFORMATION
  
Item 1.
16
Item 1A.
16
Item 2.
16
Item 3.
16
Item 4.
16
Item 5.
16
Item 6.
17
     
18
    
 
EXPLANATORY NOTE

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.
 
SPORT ENDURANCE, INC.
BALANCE SHEETS
 
   
November 30,
    
August 31,
  
   
2015
    
2015
  
ASSETS
            
Current assets
            
             
Cash and cash equivalents
  
$
-
    
$
-
  
Total current assets
    
-
      
-
  
                 
Equipment, net of accumulated depreciation
    
1,644
      
2,190
  
                 
Total Assets
    
1,644
      
2,190
  
                 
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
                
Current liabilities
                
                 
Accounts payable
    
21,009
      
21,322
  
Convertible debt - related party
    
-
      
38,543
  
Total current liabilities
    
21,009
      
59,865
  
                 
Commitments and contingencies
    
-
      
-
  
                 
Stockholders' equity (deficit)
                
                 
Preferred stock, $0.001 par value, 20,000,000 shares authorized, 1,000 shares issued and outstanding as of November 30, 2015 and August 31, 2015
    
1
      
1
  
Common stock, $0.001 par value, 580,000,000 shares authorized, 77,575,303 and 37,581,903 shares issued and outstanding as of November 30, 2015 and August 31, 2015
    
77,575
      
37,582
  
Additional paid-in capital
    
358,570
      
336,195
  
Subscription receivable
    
(5,372
)
    
-
  
Accumulated deficit
    
(450,139
)
    
(431,453
)
Total stockholders' equity (deficit)
    
(19,365
)
    
(57,675
)
                 
Total liabilities and stockholders' equity (deficit)
  
$
1,644
    
$
2,190
  
 
See accompanying notes to these financial statements.
 
 
SPORT ENDURANCE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
 
   
For the Three Months Ended
    
For the Three Months Ended
  
   
November 30,
    
November 30,
  
   
2015
    
2014
  
             
Revenue
  
$
-
    
$
-
  
                 
Operating expenses:
                
General and administrative
    
10,437
      
1,708
  
Professional fees
    
5,450
      
-
  
Depreciation
    
546
      
548
  
                 
Total operating expenses
    
16,433
      
2,256
  
                 
Net Operating Loss
    
(16,433
)
    
(2,256
)
                 
Other income (expense):
                
Interest expense
    
(2,253
)
    
(4,501
)
Total other expense
    
(2,253
)
    
(4,501
)
                 
Loss before provision for income taxes
    
(18,686
)
    
(6,757
)
                 
Provision for income taxes
    
-
      
-
  
                 
Net income (loss)
  
$
(18,686
)
  
$
(6,757
)
                 
Net income (loss) per share - basic
  
$
(0.00
)
  
$
(0.00
)
                 
Net income (loss) per share - diluted
  
$
(0.00
)
  
$
(0.00
)
                 
Weighted average shares outstanding - basic
    
48,724,757
      
27,771,967
  
                 
Weighted average shares outstanding - diluted
    
48,724,757
      
27,771,967
  
 
See accompanying notes to these financial statements.
 
 
   SPORT ENDURANCE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
   
For the Three Months Ended
    
For the Three Months Ended
  
   
November 30,
    
November 30,
  
   
2015
    
2014
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Net loss
  
$
(18,686
)
  
$
(6,757
)
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation
    
546
      
548
  
Amortization of debt discount
    
1,700
      
4,170
  
Imputed interest
    
553
      
332
  
Changes in assets and liabilities:
                
Prepaid Expenses
    
-
      
(1,500
)
Accounts payable
    
(313
)
    
(963
)
                 
Net cash used in operating activities
    
(16,200
)
    
(4,170
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Net cash used in investing activities
    
-
      
-
  
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Proceeds from issuance of common stock
    
14,500
      
-
  
Proceeds from convertible debt - related party
    
1,700
      
4,170
  
                 
Net cash provided by financing activities
    
16,200
      
4,170
  
                 
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
    
1,700
      
4,170
  
Stock issued for conversion of debt
    
40,244
      
-
  
Stock issued for subscription receivable
    
5,372
      
75,043
  
 
See accompanying notes to these financial statements.
 
 
Sport Endurance, Inc.
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 liquid Gel Caps.
 
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 audited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles 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 Company has adopted a fiscal year end of August 31st.

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 as of November 30, 2015 and August 31, 2015.

Equipment
Equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives of the related assets as follows:
  
Computer equipment
5 years
Furniture and fixtures
7 years
    
Maintenance and repairs will be charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and any resulting gain or loss will be reflected in operations.

The Company will assess the recoverability of equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.

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.
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.

Revenue recognition
For revenue from product sales, we will recognize revenue upon shipment or delivery to our customers based on written sales terms that do not allow for a right of return. As such, revenue is recognized at the time of sale if collectability is reasonably assured. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

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.

Stock-based compensation
The Company adopted FASB guidance on stock based compensation upon inception at August 26, 2010. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.  The Company has not had any stock options issued for services and compensation from inception through the period ended as presented, and the only issuance of stock for services from inception through the periods presented occurred on February 10, 2002 with the issuance of 25,000 shares valued at $125,000.

Our employee stock-based compensation awards are accounted for under the fair value method of accounting, as such, we record the related expense based on the more reliable measurement of the services provided, or the fair market value of the stock issued multiplied by the number of shares awarded.

We account for our employee stock options under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. We do not backdate, re-price, or grant stock-based awards retroactively. As of the date of this report, we have not issued any stock options.
   
Uncertain tax positions
Effective January 1, 2009, the Company adopted new standards for accounting for uncertainty in income taxes. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
 
The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. 

 
Sport Endurance, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Recently Issued Accounting Pronouncements
In November 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-16, Derivatives and Hedging (Topic 815) - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. ASU 2014-16 was issued to clarify how current U.S GAAP should be interpreted in evaluating the economic characteristics and risk of a host contract in a hybrid financial instrument that is issued in the form of a share. In addition, ASU 2014-16 was issued to clarify that in evaluating the nature of a host contract, an entity should assess the substance of the relevant terms and features (that is, the relative strength of the debt-like or equity-like terms and features given the facts and circumstances) when considering how to weight those terms and features. The effects of initially adopting ASU 2014-16 should be applied on a modified retrospective basis to existing hybrid financial instruments issued in a form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods. ASU 2014-16 is effective fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption in an interim period is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-16 on its consolidated financial statements.
 
In April 2015, the FASB issued ASU 2015-05 regarding Subtopic 350-40, “Intangibles - Goodwill and Other - Internal-Use Software.” The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments in ASU 2015-05 may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company is currently evaluating the impact of the adoption of ASU 2015-05 on its consolidated 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 $450,139, and a working capital deficit of $21,009 as of November 30, 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

The Company has convertible notes payable to related parties; see note 5.  The Company also issued common stock to certain of its officers and directors; see note 6.

 
Sport Endurance, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Note 4 – Equipment
 
Equipment consists of the following:
 
   
November 30, 2015
    
August 31, 2015
  
             
Computer equipment
  
$
10,000
    
$
10,000
  
Furniture and fixtures
    
15,340
      
15,340
  
Total    
25,340
      
25,340
  
Less accumulated depreciation
    
(23,696
)
    
(23,150
)
Total  
$
1,644
    
$
2,190
  
 
Depreciation expense totaled $546 and $548 for the three months ended November 30, 2015 and 2014, respectively.
    
Note 5 – 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 the periods ended November 30, 2015 and August 31, 2015, the Company recorded debt discounts in the amount of $1,700 and $22,876.  During the three months ended November 30, 2015 and 2014 the Company amortized debt discounts to interest expense in the aggregate amount of $1,700 and $4,170. 

On October 28, 2015, the Company issued an unsecured convertible loan of $1,700, 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.  The Company calculated the beneficial conversion feature embedded in the convertible note.  The conversion feature, in the amount of $1,700, was recorded as debt discount.

On November 2, 2015, the Company converted $29,500 of convertible debt due to the Company’s major shareholder, BK Consulting, into 14,750,400 shares of common stock at a conversion price of $0.002.  As the note conversion occurred within the terms of the agreement, no gain or loss was recognized.

On November 10, 2015, the Company converted $10,744 of convertible debt due to the Company’s major shareholder, BK Consulting, into 5,371,500 shares of common stock at a conversion price of $0.002.  As the note conversion occurred within the terms of the agreement, no gain or loss was recognized.

As of November 30, 2015 and August 31, 2015 the balance of the convertible debt was $0 and $38,543.  The Company records imputed interest on all outstanding convertible notes at a rate of 8%.  The Company recorded imputed interest in the amount of $553 and $332 during the three months ended November 30, 2015 and 2014.

Note 6 – Stockholders’ Equity
 
Preferred stock
The Company is authorized to issue 20,000,000 shares of $0.001 par value preferred stock as of November 30, 2015 and August 31, 2015.  The Company has 1,000 shares of preferred stock issued and outstanding as of November 30, 2015 and August 31, 2015.
 
Common stock
The Company is authorized to issue 580,000,000 shares of $0.001 par value common stock as of November 30, 2015 and August 31, 2015.  The Company has 77,575,303 and 37,581,903 shares of common stock issued and outstanding as of November 30, 2015 and August 2015.
 
During the year ended August 31, 2015, no shares of common stock were issued.

On November 2, 2015, the Company converted $29,500 of convertible debt due to the Company’s major shareholder, BK Consulting, into 14,750,400 shares of common stock at a conversion price of $0.002.  As the note conversion occurred within the terms of the agreement, no gain or loss was recognized.
 

Sport Endurance, Inc.
Notes to Condensed Financial Statements
(Unaudited)

On November 3, 2015, the Company issued 14,500,000 shares of common stock at par value, $0.001 per share, to a third party investor, for cash proceeds of $14,500.

On November 10, 2015, the Company converted $10,744 of convertible debt due to the Company’s major shareholder, BK Consulting, into 5,371,500 shares of common stock at a conversion price of $0.002.  As the note conversion occurred within the terms of the agreement, no gain or loss was recognized.

On November 11, 2015, the Company issued 5,371,500 shares of common stock at par value, $0.001 per share, to the Company’s major shareholder, BK Consulting, for a stock subscription receivable, valued at $5,372.  As of November 30, 2015, subscription receivables was $5,372.

Note 7 – Subsequent Events

Effective December 3, 2015, Michael S Morrow replaced Gerald Ricks as President/CEO and Chairman of the Board of Directors.
 
Effective January 11, 2016, Michael S Morrow resigned as President/CEO and Chairman of the Board of Directors.
 
Effective January 11, 2016, Gerald Ricks will be the interim CEO.
 
 
 
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.  Since inception, the Company has yet to produce and distribute any sport energy drinks.  
 
For the three months ended November 30, 2015, we had a net loss of $18,686 as compared to a net loss of $6,757 for the three months ended November 30, 2014.  Our accumulated deficit as of November 30, 2015 was $450,139.  These conditions raise substantial doubt about our ability to continue as a going concern over the next twelve months.

Results of Operations for the Three Months Ended November 30, 2015 and 2014

Revenues

The Company had no revenues during the three month periods ending November 30, 2015 and 2014.

General and administrative expenses

General and administrative expenses were $10,437 for the three months ended November 30, 2015 compared to $1,708 for the three months ended November 30, 2014, an increase of $8,729. The increase in general and administrative expense for the three months ended November 30, 2015 compared to the three months ended November 30, 2014 was due primarily to an increase in stock servicing costs and bank service charges.

Professional fees

Professional fees were $5,450 for the three months ended November 30, 2015 compared to $0 for the three months ended November 30, 2014, increase of $5,450.  The increase in professional fees for the three months ended November 30, 2015 compared to the three months ended November 30, 2014 was due primarily to an increase in accounting service fees.  
 
Depreciation
 
Depreciation expense for the three months ended November 30, 2015 totaled $546 compared to $548 for the three months ended November 30, 2014, a decrease of $2.  The decrease in depreciation was primarily due to fully depreciating certain office equipment.  

Interest expense
 
Interest expense for the three months ended November 30, 2015 was $2,253 compared to $4,501 for the three months ended November 30, 2014, a decrease of $2,248.  Interest expense for the three months ended November 30, 2015 is comprised of $1,700 from the discount on convertible debt from the beneficial conversion feature and $553 of imputed interest on convertible debt as compared to $4,170 from the discount on convertible debt from the beneficial conversion feature and $332 in imputed interest during the three months ended November 30, 2014.

Net loss
 
For the reasons above, our net loss for the three months ended November 30, 2015 was $18,686 compared to $6,757 for the three months ended November 30, 2014, an increase in our net loss of $11,929.   
 
  
Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at November 30, 2015 compared to August 31, 2015.
  
   
November 30, 2015
    
August 31, 2015
  
             
Current Assets
  
$
0
    
$
0
  
                 
Current Liabilities
  
$
21,009
    
$
59,865
  
                 
Working Capital (Deficit)
  
$
(21,009
)
  
$
(59,865
)
  
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 November 30, 2015, we had a working capital deficit of $21,009.  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 three months ended November 30, 2015 we did not receive any proceeds from private placements.  During the three months ended November 30, 2015, we received a total of $1,700 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.  During the three months ended November 30, 2015 we received proceeds in the amount of $14,500 from the sale of common stock to fund operations. During the three months ended November 30, 2015, we issued 5,371,500 shares of common stock to a major shareholder for stock subscription receivable, valued at $5,372.
 
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 November 30, 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 $450,139 and a working capital deficit of $21,009 at November 30, 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 November 30, 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

The Company has assessed all newly issued accounting pronouncements released during the three months ended November 30, 2015 and through the date of this filing, and has found none of them will have a material impact on the Company’s financial statements when or if adopted.
 
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:
 
 
●
The Company does not have an independent board of directors or audit committee or adequate segregation of duties;
     
 
●
All of our financial reporting is carried out by our financial consultant;
     
 
●
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.
  
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.

Item 1A. Risk Factors.

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 November 18, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On November 2, 2015, the Company converted $29,500 of convertible debt due to the Company’s major shareholder, BK Consulting, into 14,750,400 shares of common stock at a conversion price of $0.002.

On November 3, 2015, the Company issued 14,500,000 shares of common stock at par value, $0.001 per share, to a third party investor, for cash proceeds of $14,500.

On November 10, 2015, the Company converted $10,744 of convertible debt due to the Company’s major shareholder, BK Consulting, into 5,371,500 shares of common stock at a conversion price of $0.002.

On November 11, 2015, the Company issued 5,371,500 shares of common stock at par value, $0.001 per share, to the Company’s major shareholder, BK Consulting, for stock subscription receivable, valued at $5,372.  As of November 30, 2015, subscription receivables was $5,372.
 
Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.
 
 
Item 6. Exhibits.

           
Incorporated by reference
Exhibit
  
Exhibit Description
  
Filed herewith
  
Form
  
Period ending
  
Exhibit
  
Filing date
                         
31.1
    
X
                
31.2
    
X
                
32.1
    
X
                
101.INS
  
XBRL Instance Document
                    
101.SCH
  
XBRL Taxonomy Extension Schema Document
                    
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase Document
                    
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase Document
                    
101.LAB
  
XBRL Taxonomy Extension Label Linkbase Document
                    
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase Document
                    
 
 
SIGNATURES
 
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.
 
 
SPORT ENDURANCE, INC.
  
       
Date: January 29, 2016
By:
/s/ Gerald Ricks
  
   
Gerald Ricks
  
   
President, Chief Executive Officer, Director
(Principal Executive Officer, Principal Financial Officer,
and Principal Accounting Officer)
  
 
 
 
18
 
 
 

Better Choice Co Inc. Reports