Filing summary
Period and entity: This is Intellisense Solutions Inc.’s unaudited Form 10-Q for the three and six months ended September 30, 2018, corresponding to its fiscal second quarter and first half of fiscal 2019. The request identifies Odysight.Ai Inc., but the filing is for Intellisense Solutions Inc.; the filing describes Intellisense as a shell company seeking an acquisition or merger.
Financial performance and position
| Metric | Three months ended Sep. 30, 2018 | Six months ended Sep. 30, 2018 | Comparable 2017 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $13,198 | $21,603 | $4,649 and $12,097, respectively |
| Interest expense | $1,550 | $2,829 | $1,163 and $2,005, respectively |
| Net loss | $14,748 | $24,432 | $5,812 and $14,102, respectively |
| Basic and diluted loss per share | $0.01 | $0.01 | $0.00 and $0.01, respectively |
There was no revenue or gross profit, so operating and gross margins are not meaningful. For the six months, operating cash use was $32,793, compared with $17,101 in 2017; financing provided $24,000, and cash declined by $8,793 to $1,360.
At September 30, 2018, cash was $1,360, prepaid expenses were $2,917, current liabilities totaled $101,014, and stockholders’ deficit was $96,737. Current debt comprised $75,000 of related-party notes; the $51,000 of notes outstanding at March 31 had been repaid. Working capital was negative $96,737. The filing reports an accumulated deficit of $169,885.
Changes versus the prior comparable period
- Six-month net loss increased by $10,330, while operating expenses rose by $9,506. Management attributed the increase in professional fees mainly to board consulting fees and higher independent audit fees.
- Cash fell from $10,153 at March 31 to $1,360 at September 30. The company repaid $51,000 of prior notes and received $75,000 under five new notes.
- On June 6, five investors each provided $15,000 at 8% annual interest, due December 5, 2018. The filing classifies these holders as related parties.
Outlook, risks, and other notable items
- Going concern: Management says available cash is insufficient to meet plans through the fiscal year and for the 12 months following September 30. The filing states that substantial doubt exists about the company’s ability to continue as a going concern. It expects to seek loans and/or equity financing and may pursue a merger, but provides no assurance of funding or a successful transaction; management warns the business may fail without financing.
- Subsequent financing: After quarter-end, the company received $30,000 under three notes bearing 8% interest and due May 1, 2019: $10,000 each from Amir Uziel, L.I.A. Pure Capital Ltd., and Attribute Ltd.
- Controls: Management concluded disclosure controls and internal control over financial reporting were not effective, citing material weaknesses including no functioning audit committee, inadequate segregation of duties, and ineffective period-end reporting controls. It said remediation was under review.
- Governance and related parties: The filing reports changes to officers and directors associated with the note financing; Oded Gilboa became CFO on November 2, 2018. Eventus, a firm associated with the president, provided services and office space at no charge.
- The company reported no pending material legal proceedings, no equity sales during the six-month period, and no material off-balance-sheet arrangements. It provided no operating or financial guidance.
Important facts for investors to verify
- Confirm the correct issuer: the supplied request names Odysight.Ai, while this filing names Intellisense Solutions Inc.
- Verify the status, terms, maturity, and related-party classification of the $75,000 quarter-end notes and the $30,000 subsequent notes. The MD&A describes the $75,000 lender as unaffiliated, while the notes and other disclosures identify the five investors as related parties.
- Assess near-term liquidity, repayment obligations, and the feasibility of obtaining further financing or completing a merger, given minimal cash and the going-concern warning.
- Monitor remediation of the disclosed material weaknesses and any subsequent changes in governance or financial reporting controls.