Filing summary
Issuer and period: The supplied filing identifies the registrant as Intellisense Solutions Inc., not Odysight.Ai Inc. It reports the three months ended June 30, 2018 (the company’s first fiscal quarter of fiscal 2019, given its March 31 year-end), with comparative results for the three months ended June 30, 2017. The filing was signed August 13, 2018.
Business context
The company reported no commercial sales or significant operations since inception. It was seeking to acquire or merge with an operating business. The filing also identifies the company as a shell company.
Financial results and liquidity
- Revenue: $0 in both quarters; the filing says no revenue has been generated since inception.
- Operating expenses: $8,405, up from $7,448. Professional fees were $8,109, including accounting/audit fees and consulting fees; general and administrative expense was $296.
- Net loss: $9,684, compared with $8,290 in the prior-year quarter. Interest expense was $1,279 versus $842. Reported basic and diluted loss per share was $0.00, rounded.
- Cash flow: Operating cash use was $9,917 versus $8,942. Financing provided $50,000, including $60,000 of related-party note proceeds and $10,000 of note repayments. Cash increased by $40,083 to $50,236.
- Balance sheet at June 30: Cash and total assets were $50,236. Current liabilities totaled $132,225, including $101,000 in notes payable ($60,000 related-party notes) and $31,225 in accounts payable and accrued expenses. Stockholders’ deficit was $81,989; accumulated deficit was $155,137. The company reported a working-capital deficit of $81,989.
- Debt: Four related-party notes totaling $60,000 were issued at 8% interest, due December 5, 2018. Two $10,000 notes issued in 2015 remained in default and accrued interest at 15%. The company paid off another note for $10,000 plus $3,321 accrued interest. A separate note agreement with Trius Holdings was amended to be due on or before May 17, 2019.
Changes, outlook, and risks
Compared with the prior-year quarter, the net loss increased by $1,394, primarily alongside higher professional fees and interest expense; operating cash use increased by $975. Cash was higher than at March 31, 2018, principally because of new borrowing, while current liabilities rose from $82,458 to $132,225.
Management said available cash was insufficient to fund its plans through the balance of fiscal 2019 or for the twelve months after June 30. It expected to seek loans and/or additional equity financing, but had no financing arranged and gave no assurance it could raise adequate funds. The filing states that failure to obtain financing could cause the business to fail and that substantial doubt existed about the company’s ability to continue as a going concern. Management also cited a possible merger with an operating company as part of its plan; no specific transaction or financial guidance was provided. The financial statements include no adjustments that might be required if the company cannot continue as a going concern.
Management concluded disclosure controls and internal controls over financial reporting were not effective, citing no functioning audit committee, inadequate segregation of duties, and ineffective period-end reporting controls; it said it was reviewing remediation. The company reported no material pending legal proceedings, no material off-balance-sheet arrangements, and no material impact from inflation.
Important facts for investors to verify
- Confirm issuer identity: the supplied metadata names Odysight.Ai Inc., but the filing names Intellisense Solutions Inc.
- Resolve inconsistencies in the filing: it describes the June 6, 2018 related-party borrowing as four notes totaling $60,000, while the exhibit list names five June 6 note agreements, including one with Nir Reinhold; a separate note says Reinhold’s $15,000 note was received July 5. The MD&A also calls the $60,000 borrowing from an “unaffiliated lender,” whereas the notes identify the lenders as related parties.
- Verify the terms and status of the defaulted notes, the Trius amendment, and subsequent financing, including the July 5, 2018 $15,000 related-party note.
- Assess near-term funding needs, ability to obtain financing or complete a merger, and progress in remediating the disclosed material weaknesses.
- The filing’s contents page contains references to March 31 for statements that elsewhere clearly cover the three months ended June 30; confirm the period and figures against the filed financial statements.