Better Choice Co Inc. - Quarter Report: 2012 February (Form 10-Q)

sportendurance10q022912.htm

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 29, 2012

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)

(877) 255-9218

(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: 60,200,000 shares of $0.001 par value common stock outstanding as of March 30, 2012.

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SPORT ENDURANCE, INC.

FORM 10-Q

Quarterly Period Ended February 29, 2012

TABLE OF CONTENTS

		Page


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		3

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Balance Sheets as of February 29, 2012 (Unaudited) and August 31, 2011	4
	Condensed Statements of Operations for Three and Six Months ended February 29, 2012 and February 28, 2011 and the period from January 3, 2001 (inception) to February 29, 2012 (Unaudited)	5
	Statement of Stockholders’ Equity (Deficit) from January 3, 2001 (inception) to February 29, 2012	6
	Condensed Statements of Cash Flows for the Six Months ended February 29, 2012 and February 28, 2011 (Unaudited) and the period from January 3, 2001 (inception) to February 29, 2012 (Unaudited)	7
	Notes to the Condensed Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Submission of Matters to a Vote of Security Holders	19
Item 5.	Other Information	19
Item 6.	Exhibits	19

SIGNATURES		20

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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.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

SPORT ENDURANCE, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEETS

	February 29,			August 31,
	2012			2011
ASSETS
Current assets

Cash and cash equivalents	$	65		$	37
Total Current Assets		65			37

Equipment, Net of accumulated depreciation		14,860			16,956

Total Assets		14,925			16,993

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
Current liabilities

Accounts payable	$	20,921		$	20,534
Accrued expenses		3,549			8,749
Accrued interest, related party		3,356			1,859
Due to related parties		35,904			25,799
Total current liabilities		63,730			56,941

Stockholder's equity (deficit)

Preferred stock, $0.001 par value, 20,000,000 shares authorized, 1,000,000 shares issued and outstanding		1,000			1,000
Common stock, $0.001 par value, 480,000,000 shares authorized, 60,200,000 shares issued and outstanding		60,200			60,200
Additional paid-in capital		119,320			119,320
Deficit accumulated during the development stage		(229,325	)		(220,468	)
Total (deficiency in) stockholder's equity		(48,805	)		(39,948	)

Total liabilities and (deficiency in) stockholders' equity	$	14,925		$	16,993

See accompanying notes to these financial statements.

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SPORT ENDURANCE, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three			For the Three			For the Six			For the Six			January 3, 2001
	Months Ended			Months Ended			Months Ended			Months Ended			(inception) to
	February 29,			February 28,			February 29,			February 28,			February 29,
	2012			2011			2012			2011			2012

Revenue	$	-		$	-		$	-		$	-		$	-

Operating expenses:
General and administrative		994			4,137			1,114			6,574			32,714
Professional Fees		2,150			6,725			4,150			9,725			169,775
Depreciation		1,048			1,048			2,096			2,096			10,480

Total operating expenses		4,192			11,910			7,360			18,395			212,969

Net Operating Loss		(4,192	)		(11,910	)		(7,360	)		(18,395	)		(212,969	)

Other income (expense):
Interest expense		(850	)		(313	)		(1,497	)		(516	)		(3,356	)
Offering costs		-			-			-			-			(13,000	)
Total other expense		(850	)		(313	)		(1,497	)		(516	)		(16,356	)

Loss before provision for income taxes		(5,042	)		(12,223	)		(8,857	)		(18,911	)		(229,325	)

Provision for income taxes		-			-			-			-			-

Net income (loss)	$	(5,042	)	$	(12,223	)	$	(8,857	)	$	(18,911	)	$	(229,325	)

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		60,200,000			60,200,000			60,200,000			59,303,867

Weighted average shares outstanding - diluted		60,200,000			60,200,000			60,200,000			59,303,867

See accompanying notes to these financial statements.

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SPORT ENDURANCE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

																			(Deficit)
																Common			Accumulated
													Additional			Stock			During			Total
	Preferred Stock						Common Stock						Paid-In			subscriptions			Development			Stockholder's
	Shares			Amount			Shares			Amount			Capital			Receivable			Stage			Equity

Common stock issued to founder at $0.001 per share, of which $500 was paid in cash		-		$	-			1,200,000		$	1,200		$	-		$	-		$	-		$	1,200

Sale of common stock for cash		-			-			3,000,000			3,000			12,000			-			-			15,000

Net loss for the year ended August 31, 2001		-			-			-			-			-			-			(16,200	)		(16,200	)

Balance, August 31, 2001		-			-			4,200,000			4,200			12,000			-			(16,200	)		-

Issunce of common stock for professional fees		-			-			25,000,000			25,000			100,000			-			-			125,000

Net loss for the year ended August 31, 2002		-			-			-			-			-			-			(125,000	)		(125,000	)

Balance, August 31, 2002		-			-			29,200,000			29,200			112,000						(141,200	)		-

Net loss for the year ended August 31, 2003		-			-			-			-			-			-			-			-

Balance, August 31, 2003		-			-			29,200,000			29,200			112,000						(141,200	)		-

Net loss for the year ended August 31, 2004		-			-			-			-			-			-			-			-

Balance, August 31, 2004		-			-			29,200,000			29,200			112,000						(141,200	)		-

Net loss for the year ended August 31, 2005		-			-			-			-			-			-			-			-

Balance, August 31, 2005		-			-			29,200,000			29,200			112,000						(141,200	)		-

Net loss for the year ended August 31, 2006		-			-			-			-			-			-			-			-

Balance, August 31, 2006		-			-			29,200,000			29,200			112,000						(141,200	)		-

Net loss for the year ended August 31, 2007		-			-			-			-			-			-			-			-

Balance, August 31, 2007		-			-			29,200,000			29,200			112,000						(141,200	)		-

Net loss for the year ended August 31, 2008		-			-			-			-			-			-			-			-

Balance, August 31, 2008		-			-			29,200,000			29,200			112,000						(141,200	)		-

Issuance of convertible preferred stock for cash		2,000,000			2,000			-			-			3,000			-			-			5,000

Issuance of founder's sharesin exchange for contributed equipment at $0.001 per share		-			-			25,340,000			25,340			-			-			-			25,340

Common stock subscription receivable issued to founder at $0.001 per share		-			-			8,980,000			8,980			-			(8,980	)		-			-

Previously issued common stock cancelled		-			-			(6,320,000	)		(6,320	)		6,320			-			-			-

Net loss for the year ended August 31, 2009		-			-			-			-			-			-			-			-

Balance, August 31, 2009		2,000,000			2,000			57,200,000			57,200			121,320			(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		2,000,000			2,000			57,200,000			57,200			121,320						(179,621	)		899

Conversion of preferred stock into common, 3:1		(1,000,000	)		(1,000	)		3,000,000			3,000			(2,000	)		-			-			-

Net loss for the year ended August 31, 2011		-			-			-			-			-			-			(40,847	)		(40,847	)

Balance, August 31, 2011		1,000,000			1,000			60,200,000			60,200			119,320						(220,468	)		(39,948	)

Net loss for the six months ended February 29, 2012		-			-			-			-			-			-			(8,857	)		(8,857	)

Balance, February 29, 2012		1,000,000			1,000			60,200,000			60,200			119,320			-			(229,325	)		(48,805	)

See accompanying notes to these financial statements.

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SPORT ENDURANCE, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the			For the			January 3,
	Six Months Ended			Six Months Ended			2001 (inception) to
	February 29,			February 28,			February 29,
	2012			2011			2012


CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(8,857	)	$	(18,911	)	$	(229,325	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,096			2,096			10,480
Shares issued for services		-						125,000
Increase (decrease) in assets and liabilities:
Prepaid expenses		-			1,995			-
Accounts Payable		387			5,305			20,921
Accrued Expenses		(5,200	)		-			3,549
Accrued Interest, related party		1,497			516			3,356

Net cash provided by (used in) operating activities		(10,077	)		(8,999	)		(66,019	)

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash provided by (used in) investing activities		-			-			-

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock and preferred stock		-			-			30,180
Proceeds from officer, loans, related party		10,105			9,145			35,904

Net cash provided by (used in) financing activities		10,105			9,145			66,084

Net Increase (Decrease) in cash and cash equivalents		28			146			65

Cash and cash equivalents at beginning of period		37			59			-

Cash and cash equivalents at end of period	$	65		$	205		$	65

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:
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.

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Sport Endurance, Inc.

(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.

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, 2012. 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 did not have any cash equivalents at February 29, 2012.

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.

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.

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Sport Endurance, Inc.

(A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

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 September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on April 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on April 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our 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 $229,325, and a working capital deficit of $63,665 as of February 29, 2012. 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.

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Sport Endurance, Inc.

(A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

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 Parties

On February 22, 2012 the Company received an unsecured loan of $25, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks

On January 20, 2012 the Company received an unsecured loan of $1,300, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks

On January 1, 2012 the Company received an unsecured loan of $1,800, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks

On December 28, 2011, the Company received an unsecured loan of $55, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks

On December 1, 2011, the Company received an unsecured loan of $4,800, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks

On November 25, 2011, the Company received an unsecured loan of $2,100, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks.

On October 25, 2011, the Company received an unsecured loan of $25, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks.

On August 25, 2011, the Company received an unsecured loan of $712, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks.

On July 7, 2011, the Company received an unsecured loan of $3,502, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks.

On April 8, 2011, the Company received an unsecured loan of $2,500, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks.

On March 31, 2011, the Company received an unsecured loan of $2,500, due on demand, bearing interest at 10%, from the Company’s CEO, Gerald Ricks.

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 Schuurman as Secretary and Treasurer and appointed Vincent Kelly to the Board and positions of Secretary and Treasurer.

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Sport Endurance, Inc.

(A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

On December 31, 2010, the Board of Directors appointed James Hughes to the Board of Directors.

On January 7, 2011, the Company received an unsecured loan of $7,000, due on demand, bearing interest at 10%, from a major shareholder, BK Consulting, to fund operations.

On December 15, 2010, the Company received an unsecured loan of $1,140, due on demand, bearing interest at 10%, from a major shareholder, BK Consulting, to fund operations.

On October 7, 2010 and October 15, 2010, the Company received loans of $1,500, for total proceeds of $3,000, from a major shareholder, BK Consulting, to fund operations.

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 10% was $5,445 and $7,415 at February 29, 2012 and August 31, 2010, respectively. Accrued interest of $1,086 and $814 was outstanding as of February 29, 2012 and August 31, 2010, respectively.

On October 1, 2009, the Company entered into a five year, non-cancellable, commercial and industrial lease with the parents of the Company’s CEO, Robert Timothy, Robert Timothy Sr. and DeVon Timothy, that calls for monthly lease payments of $2,135, including monthly charges of $140 for taxes and insurance. On October 1, 2009 the Company paid a $1,995 deposit. The lease never commenced and was cancelled on December 15, 2010 with Robert Timothy’s resignation as CEO, and the deposit was returned to the lessor.

Note 4 – Due to Related Parties

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 10% was $5,445 at February 29, 2012 and August 31, 2011. Accrued interest of $1,086 and $814 was outstanding as of February 29, 2012 and August 31, 2011, respectively.

From time to time the Company has received loans from the Company’s CEO, Gerald Ricks, to fund operations. During the six months ended February 29, 2012, the Company received loans from Mr. Ricks in the aggregate amount of $10,105. The total outstanding balance of the unsecured, demand notes, bearing interest at 10% was $19,319 and $9,214 at February 29, 2012 and August 31, 2011, respectively. Accrued interest of $933 and $264 was outstanding as of February 29, 2012 and August 31, 2011, 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 10% was $11,140 at February 29, 2012 and August 31, 2011. Accrued interest of $1,336 and $781 was outstanding as of February 29, 2012 and August 31, 2011, respectively.

Total amounts due to related parties were $35,904 and $25,799 at February 29, 2012 and August 31, 2011, respectively.

The Company has accrued interest of $3,356 and $1,859 to related parties as of February 29, 2012 and August 31, 2011, respectively.

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Sport Endurance, Inc.

(A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

Note 5 – Equipment

Equipment consists of the following:

	February 29, 2012			August 31, 2011

Computer equipment	$	10,000		$	10,000
Furniture and fixtures		15,340			15,340
		25,340			25,340
Less accumulated depreciation		(10,480	)		(8,384	)
	$	14,860		$	16,956

Depreciation expense totaled $1,048 and $1,048 for the three months ended February 29, 2012 and February 28, 2011, respectively.

Note 6 – 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.

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Sport Endurance, Inc.

(A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

Preferred stock

On August 15, 2009, the Company issued a total of 2,000,000 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 $0.0025 per share.

On October 12, 2010, a preferred stock shareholder elected to convert 1,000,000 shares of preferred stock in exchange for 3,000,000 shares of common stock.

Common stock

As noted above, on October 12, 2010, a preferred stock shareholder elected to convert 1,000,000 shares of preferred stock in exchange for 3,000,000 shares of common stock.

On August 20, 2009, the Company issued 8,980,000 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 25,340,000 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 6,320,000 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 25,000,000 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 3,000,000 shares of its $.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 $0.001 per share to a total of nineteen individual investors. Due to a lack of operations, management believes the purchase price of $0.001 per share is representative of fair value.

On January 10, 2001 the Company issued 1,200,000 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.

Note 7 – Subsequent Events

There are no subsequent events to disclose through the date of this filing.

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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 29, 2012, we had a net loss of $8,857 as compared to a net loss of $18,911 for the six months ended February 28, 2011. Our accumulated deficit as of February 29, 2012 was $229,325. 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 February 29, 2012, and February 28, 2011

Revenues

The Company had no revenues during the three month periods ending February 29, 2012 and February 28, 2011.

General and administrative expenses

General and administrative expenses were $994 for the three months ended February 29, 2012 compared to $4,137 for the three months ended February 28, 2011, a decrease of $3,143. The decrease in general and administrative expense for the three months ended February 29, 2012 compared to February 28, 2011 was due primarily to a decrease in stock servicing costs during the same period in 2011.

Professional fees

Professional fees were $2,150 for the three months ended February 29, 2012 compared to $6,725 for the three months ended February 28, 2011, a decrease of $4,575. The decrease in professional fees for the three months ended February 29, 2012 compared to February 28, 2011 was due primarily to decreased accounting and legal fees.

Depreciation

Depreciation expense for the three months ended February 29, 2012 totaled $1,048 compared to $1,048 for the three months ended February 28, 2011. We anticipate our quarterly depreciation expense to continue to be $1,048 for the near term.

Interest expense

Interest expense for the three months ended February 29, 2012 was $850 compared to $313 for the three months ended February 28, 2011. The increase in interest expense is due to interest on loans from related parties that were not outstanding during the comparable previous period.

Net loss

For the reasons above, our net loss for the three months ended February 29, 2012 was $5,042 compared to $12,223 for the three months ended February 28, 2011, a decrease of $7,181 or approximately 59%.

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Results of Operations for the Six Months Ended February 29, 2012, and February 28, 2011

Revenues

The Company had no revenues during the six month periods ending February 29, 2012 and February 28, 2011.

General and administrative expenses

General and administrative expenses were $1,114 for the six months ended February 29, 2012 compared to $6,574 for the six months ended February 28, 2011, a decrease of $5,460. The decrease in general and administrative expense for the six months ended February 29, 2012 compared to February 28, 2011 was due primarily to a decrease in stock servicing costs during the same period in 2011.

Professional fees

Professional fees were $4,150 for the six months ended February 29, 2012 compared to $9,725 for the six months ended February 28, 2011, a decrease of $5,575. The decrease in professional fees for the six months ended February 29, 2012 compared to February 28, 2011 was due primarily to decreased accounting and legal fees.

Depreciation

Depreciation expense for the six months ended February 29, 2012 totaled $2,096 compared to $2,096 for the six months ended February 28, 2011. We anticipate our quarterly depreciation expense to continue to be $1,048 for the near term.

Interest expense

Interest expense for the six months ended February 29, 2012 was $1,497 compared to $516 for the six months ended February 28, 2011. The increase in interest expense is due to interest on loans from related parties that were not outstanding during the comparable previous period.

Net loss

For the reasons above, our net loss for the six months ended February 29, 2012 was $8,857 compared to $18,911 for the six months ended February 28, 2011, a decrease of $10,054 or approximately 53%.

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Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at February 29, 2012 compared to August 31, 2011.

	February 29, 2012			August 31, 2011

Current Assets	$	65		$	37

Current Liabilities	$	63,730		$	56,941

Working Capital (Deficit)	$	(63,665	)	$	(56,904	)

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 29, 2012, we had a working capital deficit of $63,665. 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 29, 2012 we did not receive any proceeds from private placements. During six months ended February 29, 2012, we received a total of $10,105 in unsecured loans due on demand, bearing interest at 10%, 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 29, 2012, our cash balance was $65. 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 $229,325 and a working capital deficit of $63,665 at February 29, 2012, 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.

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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 29, 2012, we had no employees, other than our non-paid CEO, Gerald Ricks, who replaced Robert Timothy, who resigned on December 15, 2010. 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

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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.

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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 December 6, 2011.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

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	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
31.2	Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
32.1	Certification by the Chief Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act	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

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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: April 16, 2012	By:	/s/ Gerald Ricks
		Gerald Ricks
		President, Chief Executive Officer, Director (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

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