Business Context and Reporting Period
Company: KokiCare, Inc. (Note: Input metadata referenced "Beyond Air, Inc.", but the filing text identifies the registrant as KokiCare, Inc.)
Reporting Period: Fiscal year ended June 30, 2016.
Status: The Company is a shell company in the discovery and planning phase, developing a SaaS-based enterprise software application for healthcare asset management. It has no commercial revenue and relies on the part-time, uncompensated services of its CEO, Jason Lane, who owns approximately 87.2% of the outstanding stock.
Key Financial Metrics
| Metric | Year Ended June 30, 2016 | Period from Inception (April 24, 2015) to June 30, 2015 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(29,748) | $(512) |
| Operating Expenses | $29,286 | $504 |
| Cash and Cash Equivalents | $5,918 | $14,596 |
| Working Capital | $(25,160) | $14,596 |
| Total Current Liabilities | $31,104 | $0 |
| Debt Obligations | $35,470 (Principal + Accrued Interest) | $10,008 |
Note: Debt includes a $10,000 related-party note and $20,000 in convertible promissory notes.
Material Changes vs. Prior Period
- Liquidity Deterioration: Cash reserves decreased by approximately 60% from $14,596 to $5,918. The Company moved from positive working capital of $14,596 to negative working capital of $(25,160).
- Expense Surge: General and administrative expenses increased from $504 to $29,286, driven primarily by professional fees (legal, accounting, consulting) of $28,409.
- Debt Accumulation: The Company incurred no debt in the prior period. In the current period, it issued a $10,000 unsecured note to a relative of the CEO and two convertible notes totaling $20,000 principal.
- Accumulated Deficit: The retained deficit grew from $(512) to $(30,260).
Outlook, Risks, and Contingencies
- Going Concern: The independent auditor has raised substantial doubt about the Company's ability to continue as a going concern due to recurring losses, lack of revenue, and insufficient cash to support daily operations.
- Capital Needs: Management explicitly states the need to raise additional capital to hire engineers and develop the product. Failure to do so may force the suspension of operations or liquidation.
- Debt Risks: Convertible notes bear 8% interest, which accelerates to 24% in the event of default. These notes are convertible at a discount (60% of the average of the lowest three trading prices), creating significant dilution risk.
- Market Liquidity: The stock trades on the OTCBB under symbol "KKIC" and is classified as a "penny stock," which restricts broker-dealer practices and makes it difficult for investors to liquidate shares.
- Management Concentration: The CEO controls 87.2% of the voting power, limiting minority shareholder influence.
Investor Verification Checklist
- Capital Sufficiency: Verify if the Company has secured the additional financing required to fund product development and cover the $31,104 in current liabilities.
- Debt Maturity: Confirm the status of the convertible notes maturing in October and November 2016 and the related-party note maturing in June 2017.
- Product Development: Assess progress in moving from the "discovery and planning phase" to the design and implementation phases.
- Stock Liquidity: Review recent trading volume and price history on the OTCBB to understand the difficulty of exiting the investment.
- Related Party Transactions: Scrutinize the terms of the note issued to the CEO's relative and the potential for future related-party financing.