Ondas Inc. — 2018 Q2 10-Q Summary
Issuer discrepancy: The supplied filing is for Zev Ventures, Inc., a Nevada company identified as ZVVT, not Ondas Inc. Investors should verify that this is the intended filing before relying on the information below.
Business context and reporting period
The unaudited report covers the three and six months ended June 30, 2018, compared with the same periods in 2017. Zev Ventures described its business as buying sporting-event and concert tickets in bulk for resale on secondary marketplaces. The filing said growth depended on additional funding to purchase tickets.
Financial performance and position
| Metric | Q2 2018 | Six months 2018 |
|---|---|---|
| Revenue | $1,928 | $2,178 |
| Gross loss | $1,618 | $1,541 |
| Operating expenses | $22,308 | $28,422 |
| Net loss | $23,926 | $29,963 |
| Operating cash used | Not separately stated | $13,450 |
At June 30, 2018, cash was $2,460, total current assets were $3,199, and current liabilities were $21,035, resulting in a working-capital deficit of $17,836. Total liabilities were $21,035; the balance sheet reported no related-party loan outstanding. The company had an accumulated deficit of $129,769. No interest or income taxes were paid in the first half.
Material changes versus prior comparable periods
- Q2 revenue rose $573 from $1,355, while gross loss narrowed by $328. Net loss increased to $23,926 from $4,838, mainly as operating expenses rose $19,416.
- First-half revenue rose $522 from $1,656 and gross loss narrowed by $1,293. Net loss increased to $29,963 from $12,242 as operating expenses rose $19,014.
- Cash declined by $950 during the first half, from $3,410 to $2,460. Financing provided $12,500, while operating activities used $13,450.
- On June 27, the former officer and director forgave $89,633 of related-party loans; the company recorded the forgiveness as additional paid-in capital.
Outlook, risks, contingencies, and unusual items
- Going concern: Management said available resources and expected operating cash flows would not meet cash needs through the evaluation period ending August 10, 2019. The filing states substantial doubt exists about the company’s ability to continue as a going concern. Management planned to seek public or private financing, with no assurance funding would be available; possible cost reductions or spending deferrals were not finalized.
- Control change and leadership: On May 22, Energy Capital, LLC bought 3.5 million shares from the former controlling shareholder for $434,000 and also purchased 865,150 shares from other shareholders for $14,259. On June 28, Eric Brock became the sole officer, serving as CEO and CFO, among other roles; the former officer and director resigned.
- Auditor: The company dismissed Weinstein & Co. and engaged RRBB on June 28, 2018.
- Controls: Management concluded disclosure controls were ineffective at June 30, citing a material weakness from insufficient segregation of duties in a company with limited employees. The filing gave no assurance the weakness would be remediated promptly.
- The company reported no legal proceedings or off-balance-sheet arrangements. Adoption of the new revenue standard had no material impact; the filing provided no specific financial guidance.
Important facts for investors to verify
- Confirm the issuer and filing identity: the document names Zev Ventures, Inc., not Ondas Inc.
- Review the company’s current financing, cash runway, and any subsequent developments affecting the disclosed going-concern uncertainty.
- Verify the status and terms of the change in control, related-party debt forgiveness, and leadership transition.
- Assess whether disclosure-control weaknesses have been remediated and review subsequent auditor disclosures.
- Consider the very small reported revenue base, recurring losses, and limited cash relative to current liabilities.