Business context and reporting period
Important identification and period mismatch: The request identifies Odysight.Ai Inc. and 2014 Q1, but the supplied filing is for Intellisense Solutions Inc., a Nevada company. It reports the three months ended June 30, 2014, with comparisons to the three months ended June 30, 2013. The filing states a March 31 fiscal year-end, so this is its first fiscal quarter of the year ending March 31, 2015—not calendar-year Q1.
The filing describes a company with limited operations and no revenue. Its business description is inconsistent: the notes say it was formed to market vegetarian products online, while the MD&A discusses consulting services and development of a product and web portal.
Financial results and liquidity
- Revenue: $0 in both comparative quarters.
- Operating expenses and net loss: $7,400 for the 2014 quarter, versus $9,726 in 2013; the 2014 expenses comprised $6,200 of professional fees and $1,200 of general and administrative expenses. The loss narrowed by $2,326, or about 24%.
- Per-share result: Basic and diluted net loss per share was reported as $0.00 in both periods; the filing does not provide a more precise per-share amount.
- Cash flow: Cash used in operating activities was $5,351, compared with $9,564 in 2013. Cash declined from $36,501 at March 31, 2014 to $31,150 at June 30, 2014.
- Balance sheet at June 30, 2014: Total assets were $32,635, including $31,150 cash and $1,485 prepaid expenses. Current liabilities were $8,569, all reported as accounts payable and accrued expenses. Stockholders’ equity was $24,066; accumulated deficit was $49,082.
- Debt and margins: No debt balance or gross profit is reported; with no revenue, operating and profit margins are not meaningful.
Changes, outlook, and risks
Compared with the prior-year quarter, the company reduced its operating expenses and net loss, while operating cash use also decreased. It nevertheless remained pre-revenue and dependent on external financing. Management said available cash was insufficient to fund its planned 12-month operating plan and that no financing was arranged; it intended to seek debt or equity financing, with no assurance of success. Failure to obtain funding could force the company to suspend or cease operations. The filing states that these conditions raise substantial doubt about the company’s ability to continue as a going concern.
Management’s plan depended on proceeds from a registered offering and contemplated developing a web presence and product, marketing, and potentially hiring sales staff. The filing gives offering proceeds scenarios but does not establish that the necessary funds were raised. It warns that equity financing could dilute existing holders and borrowing would increase liabilities and future cash commitments. No subsequent events were reported through the filing date. Management concluded disclosure controls were effective as of June 30, 2014, and reported no material change in internal control over financial reporting during the quarter. The company reported no pending material legal proceedings.
Important facts for investors to verify
- Confirm the issuer and filing identity: the supplied report is for Intellisense Solutions Inc., not Odysight.Ai Inc.
- Confirm the intended reporting period; the filing covers the quarter ended June 30, 2014, not a period identified as calendar 2014 Q1.
- Resolve the conflicting descriptions of the company’s business and planned product or services.
- Verify whether the registered offering or other financing was completed after the reported period, and assess cash needs and dilution risk.
- Review the going-concern disclosure and the company’s ability to generate revenue and fund operations.