Business Context and Reporting Period
Company: KokiCare, Inc. (Note: Input metadata referenced "Beyond Air, Inc.", but the filing text identifies the registrant as KokiCare, Inc.)
Reporting Period: Quarterly report (Form 10-Q) for the period ended December 31, 2015.
Business Overview: A Delaware corporation incorporated in April 2015, currently in the discovery and planning phase to develop a real-time, SaaS-based enterprise software application for healthcare asset management. The company has not yet commenced commercial operations or generated revenue.
Key Financial Metrics
| Metric | Three Months Ended Dec 31, 2015 | Six Months Ended Dec 31, 2015 | Balance Sheet (Dec 31, 2015) |
|---|---|---|---|
| Net Revenue | $0 | $0 | N/A |
| Net Loss | $(2,947) | $(9,137) | N/A |
| Operating Expenses | $2,897 | $9,037 | N/A |
| Cash and Cash Equivalents | N/A | N/A | $5,533 |
| Total Assets | N/A | N/A | $5,559 |
| Total Liabilities | N/A | N/A | $10,108 |
| Stockholders' Equity (Deficit) | N/A | N/A | $(4,549) |
| Working Capital | N/A | N/A | $5,533 |
Debt: The company has a related-party note payable of $10,000 (plus accrued interest) due June 15, 2017, bearing 2% annual interest.
Material Changes vs. Prior Period
- Cash Position: Cash and cash equivalents decreased from $14,596 at June 30, 2015, to $5,533 at December 31, 2015, a reduction of $9,063.
- Accumulated Deficit: The accumulated deficit increased significantly from $(512) at June 30, 2015, to $(9,649) at December 31, 2015.
- Equity Status: Stockholders' equity shifted from a positive balance of $4,588 to a deficit of $(4,549) due to operating losses.
- Revenue: No revenue was generated in the current period or the prior comparable period.
Outlook, Risks, and Management Commentary
- Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern. The company has an accumulated deficit and negative cash flow from operations. Continued operations are dependent on raising additional funds through public or private offerings.
- Liquidity: With only $5,533 in cash and no revenue, the company may exhaust capital reserves and suspend operations if additional financing is not secured.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective due to material weaknesses, including inadequate segregation of duties and insufficient written accounting policies.
- Future Plans: The company intends to hire engineers to begin the implementation phase of its software, but this is contingent on raising capital. No specific revenue guidance was provided.
- Related Party Transactions: A significant portion of the company's debt ($10,000) is owed to a relative of the CEO.
Investor Verification Checklist
- Capital Sufficiency: Verify if the company has secured the additional financing required to fund operations beyond the current cash balance of $5,533.
- Product Development: Confirm the status of the software development and whether the company has moved from the "discovery and planning" phase to active development.
- Related Party Debt: Review the terms of the $10,000 note payable to the CEO's relative and any potential conversion or repayment obligations.
- Internal Controls: Assess the timeline and funding required to remediate the identified material weaknesses in internal controls over financial reporting.
- Ownership Concentration: Note that the founder, Jason Lane, owns approximately 87.21% of the common stock, giving him significant control over corporate decisions.