Filing summary
Identity and period: The supplied filing is for Intellisense Solutions Inc., not Odysight.Ai Inc. It is a Form 10-Q for the three and nine months ended December 31, 2017, filed February 7, 2018. The company identified itself as a shell company and smaller reporting company. Investors should verify that this is the intended filing.
Business context
Intellisense reported no commercial sales or significant operations. It said it was seeking to acquire or merge with an operating entity; a previously proposed merger with Dotz Nano Ltd. was terminated in 2016. The company reported no revenue from inception through December 31, 2017.
Financial results and position
- Revenue: $0 in both the quarter and nine-month period, and in the comparable 2016 periods.
- Quarter results: Operating expenses were $3,129, down from $5,104; net loss was $4,309, versus $6,123. Interest expense was $1,180.
- Nine-month results: Operating expenses were $15,226, down from $24,833. Net loss was $18,411, versus net income of $22,871 in 2016. The prior-period result included $50,000 of one-time termination-fee income from the Dotz transaction; current-period interest expense was $3,185.
- Cash flow: Operating activities used $20,948 over nine months, compared with $4,631 used in 2016. Financing provided $21,000 from note borrowings; cash increased $52 to $2,712.
- Liquidity and deficit: At December 31, cash and total assets were $2,712; current liabilities were $65,453, producing a $62,741 working-capital deficit. Accumulated deficit was $135,889 and stockholders’ deficit was $62,741.
- Debt: Notes payable totaled $41,000, including $20,000 in default and $21,000 borrowed during the period. The defaulted notes were originally stated at 12% interest; the filing says they were accruing at 15% after default. Newer notes bear 8% interest and mature in May and June 2018.
- Margins: Not meaningful because the company reported no revenue.
Outlook, risks, and unusual items
- Management said existing cash was insufficient to fund operations through the fiscal year ending March 31, 2018, and that the company had no financing arranged. It expected to seek loans or equity financing; management cautioned that funding was not assured and that, without it, the business would likely fail.
- The filing states that losses, the working-capital deficit, and inadequate cash raise substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no adjustments for a potential inability to continue.
- On January 10, 2018, after the quarter, the company received a $10,000 promissory note from Mediapark Investments Limited, due July 10, 2018, bearing 12% interest.
- The sole officer and director was also associated with Eventus, which provided accounting and advisory services. The company incurred $9,658 in Eventus fees during the nine months and owed it $4,591 at quarter-end; Eventus provided office space at no charge.
- Management concluded disclosure and internal controls were ineffective and identified material weaknesses involving the lack of an audit committee, inadequate segregation of duties, and ineffective period-end reporting controls. Management said it planned to address them but reported no material control changes during the nine months.
- The filing reported no pending legal proceedings considered likely to have a material adverse effect and no material off-balance-sheet arrangements.
Important facts to verify
- Confirm that the Intellisense Solutions Inc. filing—not an Odysight.Ai Inc. filing—is the intended document.
- Verify the default status, applicable interest rate, accrued interest, and repayment or extension terms for the $20,000 notes.
- Assess whether the subsequent $10,000 note and any other financing provide enough liquidity to meet near-term obligations.
- Check for subsequent developments in financing, a potential merger or acquisition, and the company’s going-concern status.
- Review whether the disclosed control weaknesses have been remediated and whether related-party service fees remain current.