Ondas Inc. — Filing Summary
Filing/entity note: The supplied 10-Q is filed by Zev Ventures, Inc., not Ondas Inc. Its stated business is buying and reselling tickets to sporting events online. The filing covers the quarter and nine months ended September 30, 2016; interim financial statements are unaudited.
Financial results and position
| Metric | Three months ended Sep. 30, 2016 | Three months ended Sep. 30, 2015 | Nine months ended Sep. 30, 2016 | Nine months ended Sep. 30, 2015 |
|---|---|---|---|---|
| Revenue | $2,094 | $628 | $3,694 | $2,330 |
| Cost of sales | $3,211 | $896 | $7,653 | $3,557 |
| Gross profit (loss) | $(1,117) | $(268) | $(3,959) | $(1,227) |
| Operating expenses | $2,689 | $4,047 | $15,155 | $13,646 |
| Net loss | $(3,806) | $(4,315) | $(19,114) | $(14,873) |
- Revenue increased year over year in both periods, but cost of sales exceeded revenue, producing negative gross margins. The nine-month net loss widened by $4,241 year over year.
- At September 30, 2016, cash was $6,447, inventory $7,205, total assets $13,652, total liabilities $53,029, and stockholders’ deficit $39,377. The company reported a $39,377 working-capital deficit.
- For the first nine months, operating cash outflow was $22,927, versus $15,775 in 2015. Related-party advances provided $24,200 of financing, compared with $19,164 in 2015. Ending cash was $6,447, up from $5,174 at year-end 2015.
- Related-party debt was $50,503, up from $26,303 at December 31, 2015. It is unsecured, non-interest-bearing, has no fixed repayment schedule, and is payable on demand. No investing cash flows were reported.
- The filing reports no earnings per share amount beyond dashes; weighted-average shares were 3,000,000 for each period.
Outlook, risks, and other disclosures
- Management states that substantial doubt exists about the company’s ability to continue as a going concern. Revenue has not covered operating costs, and management says additional financing is needed; it intends to seek funds through public or private offerings, which may not be sufficient.
- Management says expansion may require future financing and could affect the ability to become cash-flow positive. The interim results are not necessarily indicative of full-year results.
- All deferred tax assets were offset by a valuation allowance. Tax-loss carryforwards were approximately $39,677 and expire by 2036.
- Management reported disclosure controls effective at the reasonable-assurance level and no material change in internal control during the quarter. It reported no known material legal proceedings or material subsequent events, and no significant off-balance-sheet arrangements.
Investor verification priorities
- Confirm the filing’s identity: it names Zev Ventures, Inc., whereas the request identifies Ondas Inc.
- Reconcile the share-count inconsistency: the cover page states 2,000,000 common shares outstanding, while the balance sheet states 3,000,000 issued and outstanding.
- Verify the company’s funding runway, the terms and demand status of related-party advances, and whether further financing was obtained.
- Assess the economics of ticket resale, particularly cost of sales exceeding revenue and the growth in inventory.
- Check the cash-flow presentation: the cash-flow statement labels $1,273 as a “decrease” although beginning cash of $5,174 rose to ending cash of $6,447.