10-Q: IIOT-OXYS, Inc. Reports Continued Losses in Q2 2024 Amidst Going Concern Uncertainty

IIOT-OXYS, Inc. reports a net loss of $647,381 for the six months ended June 30, 2024, and expresses substantial doubt about its ability to continue as a going concern.

Summary

• IIOT-OXYS, Inc. filed its Form 10-Q for the quarter ended June 30, 2024.
• The company reported a net loss attributable to common stockholders of $426,763 for the three months ended June 30, 2024, compared to a net loss of $283,058 for the same period in 2023.
• For the six months ended June 30, 2024, the net loss attributable to common stockholders was $647,381, compared to $461,228 for the same period in 2023.
• The company's revenues for the six months ended June 30, 2024, were $2,500, with a cost of sales of $2,125.
• Operating expenses for the six months were $171,354, including amortization of intangible assets of $24,682.
• The company has a working capital deficit of $2,687,848 and an accumulated deficit of $11,090,978 as of June 30, 2024.
• The report raises substantial doubt about the company's ability to continue as a going concern.
• Management believes the company can meet obligations for the next twelve months through additional borrowings and/or sale of equity securities.
• The company is pursuing options including vetting suitable companies to merge with or acquire them.
• The company's disclosure controls and procedures were deemed not effective as of June 30, 2024.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to continuing losses, a going concern warning, and ineffective disclosure controls, offset slightly by potential industry growth and management's belief in future liquidity.

Positives

• Management believes the company can meet obligations for the next twelve months through additional borrowings and/or sale of equity securities.
• The company's strategic partnership with Aingura IIoT, S.L. provides supplemental expertise, equipment, and software.
• The company has valuable real-world data, AI Machine Learning algorithms, and strong use cases developed from their data and algorithms.

Negatives

• The company has suffered continuing operating losses.
• The company has a significant working capital deficit and accumulated deficit.
• The report raises substantial doubt about the company's ability to continue as a going concern.
• The company's disclosure controls and procedures were deemed not effective as of June 30, 2024.
• The CEO and COO have accrued all compensation since mid-April 2023.
• Revenue growth for the rest of 2024 will be challenging given the difficulty in raising additional capital to fuel sales and drive marketing efforts.

Risks

• The company's ability to raise additional capital is uncertain.
• The company's potential future revenue growth depends on raising capital and securing new contracts.
• The company faces significant headwinds and has not been able to raise material funds for ongoing operations.
• The company's reliance on strategic relationships and partnerships carries inherent risks.
• The company's success depends on developing new products and adapting to customer needs.
• The company's ability to service secured debt is a concern.

Future Outlook

Potential future revenue growth depends on the company's ability to raise capital and secure new contracts in the Smart Manufacturing and Structural Health Monitoring verticals; management is pursuing options including vetting suitable companies to merge with or acquire them.

Management Comments

• Management believes that the Company will be able to achieve a satisfactory level of liquidity to meet the Company's obligations for the next twelve months by generating cash through additional borrowings and/or sale of equity securities, as needed.
• Given the current challenges in raising adequate funds, management is pursuing options including vetting suitable companies to merge with or acquire us.
• We believe we've created valuable assets from our business development in these industries, which are strong in both their size and growth.

Industry Context

The company operates in the smart manufacturing (Industry 4.0) and structural health monitoring (SHM) industries, which are experiencing significant growth; the global smart manufacturing market is projected to reach $241 billion by 2028, and the worldwide SHM industry is expected to reach $4.1 billion by 2029.

Comparison to Industry Standards

• It is difficult to compare IIOT-OXYS's results to industry standards due to its early-stage nature and limited revenue.
• Companies like Siemens, Rockwell Automation, and ABB are major players in the smart manufacturing space, while companies like Acellent Technologies and Structural Monitoring Systems are competitors in the SHM market.
• These larger companies have significantly more resources and established customer bases compared to IIOT-OXYS.

Related Party Transactions

• The company leases its current office facility from two stockholders on a month-to-month basis at a monthly rent of $250.
• The company executed a convertible promissory note payable with a director for the principal amount of $125,000.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern uncertainty.
• Employees face uncertainty regarding job security due to the company's financial challenges.
• Customers may be concerned about the company's ability to fulfill contracts and provide ongoing support.
• Creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company will continue to pursue contracts in the DOT Bridge Monitoring and Smart Manufacturing verticals.
• The company will continue to develop and refine its AI Machine Learning algorithms.
• The company will explore strategic partnerships and potential merger or acquisition opportunities.
• The company will seek additional funding through borrowings and/or sale of equity securities.

Key Dates

Keywords

IIOT-OXYS, financial statements, going concern, net loss, convertible preferred stock, derivative liability, stock incentive plan, liquidity, capital resources, edge computing, industrial internet