10-Q/A: Apple iSports Group Restates Quarterly Financials After Accounting Errors

Apple iSports Group, formerly Prevention Insurance.com, has restated its financials for the quarter ended March 31, 2023, due to errors in accounting for research and development intellectual property and share counts.

Summary

• Apple iSports Group, previously known as Prevention Insurance.com, filed an amended quarterly report (Form 10-Q/A) for the period ending March 31, 2023.
• The restatement was necessary due to the company's incorrect accounting for research and development intellectual property rights and misstated common shares outstanding.
• The company had previously reported 202,704,211 shares outstanding as of December 31, 2022 and 2021, but the correct number was 7,642,211 shares.
• This error led to a reclassification of $19,506 from common stock to additional paid-in capital.
• The restatement also corrected errors in the recording of research and development expenses, which totaled $694,700 for the quarter.
• The company reported a net loss of $1,040,797 for the quarter ended March 31, 2023, compared to a net loss of $162,165 for the same period in 2022.
• Operating expenses for the quarter were $1,031,025, significantly higher than the $161,328 reported in the same quarter of the previous year.
• The increase in operating expenses is primarily due to increased activity in the company's subsidiaries.
• The company's current assets were $66,951, while current liabilities totaled $2,718,921 as of March 31, 2023.
• The company's cash and cash equivalents were $48,015 as of March 31, 2023.
• The company is dependent on related party loans and additional capital to fund operations and has a going concern risk.

Sentiment

Score: 2

Explanation: The document reveals significant financial issues, including a restatement due to accounting errors, substantial losses, high operating expenses, and a going concern risk. The company's dependence on related party loans and the need for additional capital further contribute to a negative outlook.

Positives

• The company has a provisional Northern Territory Online Bookmaking License in Australia.
• The company is licensed in North Dakota as an Advanced Deposit Wagering provider.
• The company has a core team with industry skills and experience.
• The company has secured $1,300,000 in private placement funding and loans from related parties.

Negatives

• The company's financial statements were restated due to material accounting errors.
• The company has a significant net loss of $1,040,797 for the quarter.
• Operating expenses have increased substantially to $1,031,025.
• The company's current liabilities significantly exceed its current assets.
• The company is dependent on related party loans and additional capital.
• There is substantial doubt about the company's ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is in doubt due to its financial losses and dependence on external funding.
• The company's reliance on related party loans poses a risk if these loans are not available in the future.
• The company's failure to secure additional financing could impact its ability to execute its business plan.
• The company's internal controls over financial reporting were deemed ineffective.
• The company faces competition in the sports betting industry.
• The company is subject to regulatory risks in the sports betting industry.

Future Outlook

The company plans to obtain additional capital from management and significant stockholders and seek third-party equity and/or debt financing to continue as a going concern. The company expects to launch its sportsbook platform in September 2023.

Management Comments

• Management concluded that the company's previously issued financial statements should be restated.
• Management plans to obtain additional capital to meet minimal operating expenses.
• Management is seeking third-party equity and/or debt financing.
• Management has implemented remediation steps to improve disclosure controls and procedures.

Industry Context

The company is operating in the competitive online sports betting and gaming industry, which is subject to regulatory changes and requires significant capital investment. The company is seeking to establish itself in both the US and Australian markets, which have different regulatory frameworks.

Comparison to Industry Standards

• The restatement of financials due to accounting errors is a significant issue that would be viewed negatively by investors and is not typical of well-managed public companies.
• The company's high operating expenses and net losses are concerning, especially compared to established players in the online sports betting industry.
• The company's reliance on related party loans is not uncommon for early-stage companies but raises concerns about financial stability.
• The company's going concern risk is a major red flag and indicates a high level of financial distress.
• The company's lack of revenue is a significant concern compared to industry peers that are generating revenue.

Related Party Transactions

• The company has significant loan payables to related parties, including Cres Discretionary Trust No. 2, Apple iSports Investment Group Pty, ABA Investment Group Pty Ltd, Utti Oco Pty Ltd, and Mt. Wills Gold Mines Pty Ltd.
• The company has amounts due to related parties, including Cooper Hill Assets Inc and officers and directors.

Stakeholder Impact

• Shareholders are negatively impacted by the restatement of financials and the company's going concern risk.
• Employees may be impacted by the company's financial instability.
• Customers may be impacted by potential delays in the launch of the company's platform.
• Suppliers and creditors face increased risk due to the company's financial difficulties.

Next Steps

• The company plans to improve its disclosure controls and procedures.
• The company plans to obtain additional capital from management and significant stockholders.
• The company plans to seek third-party equity and/or debt financing.
• The company expects to launch its sportsbook platform in September 2023.

Key Dates

Keywords

restatement, financial statements, accounting errors, intellectual property, research and development, share count, net loss, operating expenses, going concern, sports betting, online gaming, related party loans