Filing summary
Issuer and period: The supplied filing is a Form 10-K for Intellisense Solutions Inc., not Odysight.Ai Inc. It covers the fiscal year ended March 31, 2016, with comparative results for the year ended March 31, 2015; it is not a clearly identified “2015 Q4” report. Filed June 28, 2016.
Business context and major developments
Intellisense had not generated revenue or developed significant operations. Its original plan was to develop online portals for vegetarian food products; it shifted to seeking an acquisition or merger with an operating company. At March 31, 2016, it reported no employees, no intellectual property and no subsidiaries.
The company agreed in December 2015 to merge with Israeli company Dotz Nano Ltd., but the transaction had not closed by fiscal year-end. On May 17, 2016, the parties terminated the agreement. Intellisense was to receive a $50,000 termination fee: $25,000 on execution and $25,000 by July 1, 2016, with the second payment personally guaranteed by a Dotz principal. The filing does not establish whether the second payment was received.
Financial results and liquidity
| Metric | Year ended March 31, 2016 | Year ended March 31, 2015 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $64,049 | $25,304 |
| Net loss | $64,310 | $25,304 |
| Net loss per share | $0.03 | $0.01 |
| Net cash used in operating activities | $23,739 | $24,638 |
| Cash at year-end | $8,124 | $11,863 |
Professional fees rose to $58,756 from $17,750, primarily because of merger-related legal costs and higher accounting and audit fees. General and administrative expense declined to $5,293 from $7,554. The filing reports no gross margin information because the company had no revenue.
At March 31, 2016, total assets were $8,124, all cash. Current liabilities were $66,272, including $20,000 of unsecured notes payable bearing 12% interest, $41,326 of accounts payable and accrued expenses, $1,861 payable to a related party, and $3,085 due to a related party. Stockholders’ deficit and negative working capital were each $58,148. The notes were due in August 2016, but also became due upon a qualifying financing of $250,000 or more or written demand by the lenders. No long-term debt is reported.
Accumulated deficit was $131,296. The auditor’s report expressed substantial doubt about the company’s ability to continue as a going concern. Management said available cash was insufficient for the next 12 months and that the company needed additional financing, likely through loans or equity; no financing was arranged, and the filing gives no assurance it could be obtained.
Changes, outlook and other notable matters
- Operating expenses increased by $38,745 and net loss increased by $39,006 year over year; the company remained without revenue.
- Management’s stated strategy was to identify an acquisition or merger target. The proposed Dotz transaction was subsequently terminated; the filing does not provide a replacement operating plan or financial forecast.
- Eventus, owned by sole officer and director Neil Reithinger, provided accounting and advisory services. The company incurred $13,179 in Eventus fees during fiscal 2016; related-party balances were also reported. The company paid no rent for office space at Eventus’s offices.
- Management concluded internal control over financial reporting was ineffective at March 31, 2016, citing no functioning audit committee, inadequate segregation of duties, and ineffective period-end reporting controls. Remediation was contingent on financing and identifying a suitable business. The auditor did not attest to internal-control effectiveness.
- The common stock was quoted on the OTC Pink under “INLL,” but did not trade and had no set bid or ask. The filing reported 2,529,680 shares outstanding as of June 28, 2016.
- The filing’s Item 1A says “Not Applicable,” but the report separately describes substantial going-concern, financing, execution, governance and internal-control risks.
Important facts for investors to verify
- Confirm the issuer and reporting period: the source is Intellisense Solutions Inc.’s fiscal 2016 Form 10-K, not a filing identifying Odysight.Ai Inc. or a 2015 Q4 period.
- Verify whether both installments of the $50,000 Dotz termination fee were paid and how they were recorded.
- Check the status, repayment or refinancing of the $20,000 notes and the other current liabilities after March 31, 2016.
- Assess subsequent financing, operating plans, and the company’s ability to continue as a going concern.
- Review subsequent filings for changes in control, share count, trading status, related-party balances, and progress in remediating reported control weaknesses.