Business context and reporting period
The supplied filing is IIM Global Corporation’s unaudited Form 10-Q for the quarter ended June 30, 2013; it identifies the company as formerly Silverwood Acquisition Corporation. This does not match the request metadata naming Authid Inc. IIM Global described itself as a development-stage company and checked the box indicating it was a shell company.
The company had no operating revenue. It was pursuing a proposed business combination with Innovation in Motion, Inc. (IIM), which operates in handheld identification and mobile payments. A term sheet was signed January 23, 2013, but no definitive merger agreement had been executed as of the report.
Financial highlights
| Metric | Period or date | Reported amount |
|---|---|---|
| Revenue | Three and six months ended June 30, 2013 | $0 |
| Operating expenses / net loss | Three months ended June 30, 2013 | $8,801 |
| Operating expenses / net loss | Six months ended June 30, 2013 | $8,871 |
| Net loss | Six months ended June 30, 2012 | $1,500 |
| Cash | June 30, 2013 | $8,908 |
| Due from related party | June 30, 2013 | $255,590 |
| Intangible assets | June 30, 2013 | $243,000 |
| Total assets | June 30, 2013 | $507,498 |
| Total liabilities | June 30, 2013 | $1,569 |
| Stockholders’ equity | June 30, 2013 | $505,929 |
| Cash used in operating activities | Six months ended June 30, 2013 | $263,242 |
| Cash used in investing activities | Six months ended June 30, 2013 | $243,000 |
| Cash provided by financing activities | Six months ended June 30, 2013 | $515,000 |
Margins are not meaningful because there was no revenue. No debt balance is reported. The balance sheet shows current assets of $264,498 against current liabilities of $1,569, but most current assets were the related-party receivable rather than cash.
Material changes versus prior comparable period
- Six-month net loss increased to $8,871 from $1,500 in 2012; second-quarter loss was $8,801 versus $750.
- Cash rose from $150 at December 31, 2012 to $8,908 at June 30, 2013. The company received $515,000 under stock subscription agreements, advanced $255,590 to IIM, and reported $243,000 of intangible-asset acquisition spending.
- The company recorded $243,000 of intangible assets and a $255,590 related-party receivable; neither amount appeared on the December 31, 2012 balance sheet.
Outlook, risks, contingencies, and unusual items
- Merger uncertainty: The proposed IIM transaction was not definitive, and the filing gives no assurance it would close. If consummated, IIM shareholders were expected to own a majority of the combined company; IIM was expected to be the accounting acquirer.
- Going concern: Management cited recurring losses and dependence on shareholder support, additional financing, or a successful business combination. Management planned to use personal funds to pay 2013 expenses; there is no assurance of profitability.
- Funding conditions: The $515,000 subscription proceeds related to 1,910,000 shares that were not to be issued until execution of a reverse merger agreement and a subsequent IPO.
- Development commitments: The company reported a $430,000 total development contract for its HDR+ device, with $43,000 paid and expensed as research and development by June 30.
- Related-party and asset details: The $255,590 advance was to IIM, and the company said it would assume IIM’s liabilities upon merger. The notes describe an Android payment application purchase for $200,000, while the financial statements and cash flow statement report $243,000 of intangible assets/acquisition spending; the filing text does not explain the difference.
- Control weaknesses: Management concluded disclosure controls were not effective and cited material weaknesses involving inadequate segregation of duties and insufficient accounting personnel.
- Filing inconsistencies: The balance sheet and inception-to-date statement show accumulated deficit/net loss of $12,064, while Note 2 and MD&A state accumulated deficit of $55,064. The filing does not reconcile these values.
Important facts for investors to verify
- Confirm the issuer’s identity and whether this filing is relevant to Authid Inc., since the filing names IIM Global Corporation.
- Reconcile the reported accumulated deficit of $12,064 versus $55,064 and the $200,000 software purchase versus $243,000 recorded intangible asset.
- Verify the terms, collectability, and use of the $255,590 advance to IIM, and the conditions attached to the $515,000 subscriptions.
- Check whether a definitive merger agreement or subsequent IPO occurred; neither was confirmed in this filing.
- Assess the company’s ability to fund operations and address its disclosed control weaknesses and going-concern uncertainty.