Business context and reporting period
This filing is for the quarter ended September 30, 2016, and reports three- and six-month results against the comparable 2015 periods. Although the request identifies Odysight.Ai Inc., the filing itself names Intellisense Solutions Inc.; verify the issuer and filing match. The company had no commercial sales or significant operations, and was seeking an acquisition or merger to establish an operating business. It identified itself as a shell company.
Financial performance and liquidity
| Metric | Three months ended September 30, 2016 | Six months ended September 30, 2016 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $8,051 in the financial statements; MD&A reports $8,052 | $19,729 |
| Net income (loss) | $(8,728) | $28,995 |
| Net income (loss) per share | $(0.00) | $0.01 |
| Cash flow from operations | $(18) for the six-month period |
The six-month profit reflected $50,000 of other income from the termination of the Dotz merger, not operating revenue. Interest expense was $1,276 for the six months. Operating expenses fell from $35,241 in the prior-year six-month period, primarily because merger-related legal fees declined; there was no revenue in either comparison period. Quarterly operating expenses also decreased from $25,569 to $8,051, mainly due to lower legal fees.
At September 30, 2016, cash and total assets were $8,106. Current liabilities were $37,259, including $20,000 of notes payable; working capital was negative $29,153. Accumulated deficit was $102,301. The notes were past due and in default, unsecured, and accruing interest at 15% after default; the filing says they remained unpaid with no extension agreements as of November 11, 2016. Cash declined by $18 during the six months, from $8,124 to $8,106. No revenue-based margin is meaningful.
Outlook, risks and unusual items
Management said available cash was insufficient for its plans over the next 12 months and that it had no financing arranged. It expected to seek loans or sell additional equity, but gave no assurance it could obtain financing; absent funding, management said the business would likely fail. The filing states that accumulated losses, negative working capital, and inadequate cash raise substantial doubt about the company’s ability to continue as a going concern.
The planned Dotz Nano Ltd. merger was terminated on May 17, 2016. The company recorded and received a $50,000 termination fee and transferred ownership of its merger subsidiary. The sole officer and director’s affiliated firm, Eventus, provided accounting and advisory services; fees were $12,646 for the six months, with $130 payable at quarter-end.
Management concluded internal controls were not effective and identified material weaknesses involving the lack of an audit committee, inadequate segregation of duties, and ineffective period-end reporting controls. Management said it was reviewing remediation, but provided no specific completed remediation. No material pending legal proceedings or off-balance-sheet arrangements were reported. The filing listed no separate risk factors.
Most important facts to verify
- Confirm that this Intellisense Solutions Inc. filing is the intended filing for Odysight.Ai Inc.
- Confirm current status and repayment or extension terms for the $20,000 defaulted notes.
- Verify the source and nonrecurring nature of the $50,000 Dotz termination fee, which drove six-month net income despite zero revenue.
- Assess whether the company obtained financing or a viable operating business after the filing date; management reported no financing arranged and substantial going-concern doubt.
- Clarify the $1 difference in quarterly operating expenses between the financial statements and MD&A, and check subsequent control remediation.