Ondas Inc. quarterly report, Q3 FY2017

Filing identity and reporting period

This Form 10-Q covers the quarter ended September 30, 2017, and reports results for the three and nine months ended that date. The supplied filing identifies the registrant as Zev Ventures, Inc., a Nevada company whose stated business is buying and reselling sports-event tickets—not Ondas Inc. This is a material identity mismatch with the request metadata.

Financial results and liquidity

Amounts are in U.S. dollars. Interim financial statements are unaudited.

MetricThree months ended Sept. 30, 2017Three months ended Sept. 30, 2016Nine months ended Sept. 30, 2017Nine months ended Sept. 30, 2016
Revenue$1,042$2,094$2,698$3,694
Cost of sales$1,556$3,211$6,046$7,653
Gross profit/(loss)$(514)$(1,117)$(3,348)$(3,959)
Operating expenses$18,164$2,689$27,572$15,155
Net loss$(18,678)$(3,806)$(30,920)$(19,114)

Gross margin was negative in both reported 2017 periods because cost of sales exceeded revenue. The filing does not provide a clear separate operating-margin figure. Basic and diluted loss per share was $(0.01) for the 2017 quarter and nine-month period; weighted-average shares were 3,000,000.

At September 30, 2017, cash was $3,908, total assets $6,870, total liabilities $70,633, and stockholders’ deficit $(63,763). Current assets were $6,870 and current liabilities $70,633, implying a working-capital deficit of $63,763. The related-party loan was $68,133, unsecured, non-interest-bearing, and payable on demand. Nine-month operating cash outflow was $36,104; financing cash inflow was $37,630, comprising $15,630 of related-party borrowing and $22,000 from stock issuance. Cash increased by $1,526 from $2,382 at year-end 2016.

Changes, outlook, risks, and unusual items

  • Year-over-year quarterly revenue declined by about half, while quarterly net loss increased substantially, alongside higher operating expenses. Nine-month revenue also declined and net loss increased.
  • Operating expenses included $14,611 in filing fees and $7,200 in legal fees for the first nine months of 2017, compared with $2,377 and $750, respectively, in the prior-year period.
  • The company issued shares for $22,000 in 2017, completed a 4-for-1 stock split, and canceled 8,000,000 shares. The balance sheet reports 5,760,000 shares outstanding at September 30, while the cover reports 3,420,000 at November 14; the filing text does not explain this difference.
  • Management says operations depend on financing and intends to seek additional funds through public or private offerings. The filing provides no quantified forecast or specific operating guidance.
  • Management and the independent accountant identify substantial doubt about the company’s ability to continue as a going concern. The accountant performed an interim review, not an audit, and stated that the financial statements do not include adjustments that might result if the company cannot continue.
  • The filing reports no material legal proceedings, defaults on senior securities, or material off-balance-sheet arrangements. Management judged disclosure controls effective and reported no material change in internal control during the quarter.

Important facts to verify

  • Confirm whether this filing belongs to Ondas Inc.; the document names Zev Ventures, Inc. and describes a ticket-resale business.
  • Reconcile nine-month 2017 revenue: the financial statements show $2,698, but MD&A states $6,698. The financial-statement figure is used above.
  • Reconcile the reported working-capital deficit: the balance-sheet figures imply $63,763, while a note states $63,793.
  • Reconcile total assets at December 31, 2016: the balance sheet reports $5,660, while MD&A states $5,600.
  • Confirm the share-count changes and the difference between 5,760,000 shares reported at September 30 and 3,420,000 reported at November 14.
  • Assess the company’s near-term funding needs, demand repayment exposure on the related-party loan, and the going-concern uncertainty.