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.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 2016
Business Stage: Early-stage development. The Company is in the discovery and planning phase to develop a real-time, SaaS-based enterprise software application for healthcare asset management. It has not yet commenced commercial operations or generated revenue.
Key Financial Metrics
| Metric | Q3 2016 | Q3 2015 |
|---|---|---|
| Net Revenue | $0 | $0 |
| Net Loss | $(9,138) | $(6,190) |
| Operating Expenses | $8,684 | $6,140 |
| Cash and Cash Equivalents (End of Period) | $2,941 | $8,456 |
| Net Cash Used in Operating Activities | $(2,977) | $(6,140) |
| Total Current Liabilities | $37,265 | N/A |
| Working Capital | $(34,298) | N/A |
| Accumulated Deficit | $(39,398) | N/A |
Debt Obligations: As of September 30, 2016, the Company held $10,000 in related-party notes and $20,000 in convertible notes payable.
Material Changes vs. Prior Period
- Revenue: Remained at $0 for both periods; no commercial revenue has been generated.
- Net Loss: Increased by approximately 48% from $(6,190) in Q3 2015 to $(9,138) in Q3 2016, driven by higher operating expenses.
- Operating Expenses: General and administrative expenses rose from $6,140 to $8,684, primarily due to an increase in professional fees (legal, accounting, consulting) from $6,000 to $7,823.
- Liquidity: Cash reserves decreased by $2,977 during the quarter, leaving only $2,941 in cash and cash equivalents.
- Liabilities: Accounts payable increased significantly from $634 to $6,341, and accrued liabilities rose from $470 to $924.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the Company's financial position raises "substantial doubt" about its ability to continue as a going concern. The Company has an accumulated deficit and negative cash flow.
- Capital Needs: Management intends to raise additional funds through private or public offerings to support daily operations and product development. There is no assurance that such funding will be obtained.
- Operational Risks: Significant risks include the inability to complete the software design phase, hire engineers, secure customers, or price the application profitably.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective due to material weaknesses, including inadequate segregation of duties and insufficient written accounting policies.
- Subsequent Events: On November 10, 2016, the Company paid off one convertible note ($15,000 principal) and restructured another ($5,000 principal) into a non-convertible note.
Investor Verification Checklist
- Cash Runway: Verify if the remaining cash balance of $2,941 is sufficient to cover immediate professional fees and interest obligations.
- Debt Maturity: Confirm the status of the $10,000 related-party note (due June 2017) and the restructured $5,000 note (due January 2017).
- Funding Status: Investigate whether the Company has secured the additional financing required to remediate internal control weaknesses and continue development.
- Related Party Transactions: Review the terms of the note payable to the CEO's relative and the convertible notes issued to investors.
- Product Development: Assess progress on the software application, as the Company remains in the discovery/planning phase with no revenue.