10-Q: IIOT-OXYS, Inc. Reports Q1 2025 Results Amidst Going Concern Uncertainty

IIOT-OXYS, Inc. reports a net loss for Q1 2025 and expresses substantial doubt about its ability to continue as a going concern.

Summary

• IIOT-OXYS, Inc. reported its financial results for the quarter ended March 31, 2025.
• The company is facing significant financial challenges, including continuing operating losses and a working capital deficit of $2,826,576.
• The net loss for the three months ended March 31, 2025, was $180,313, and the accumulated deficit reached $11,388,565.
• These factors raise substantial doubt about the company's ability to continue as a going concern.
• No revenues were recorded in Q1 2025.
• Operating expenses totaled $92,258, including amortization of intangible assets of $12,205.
• The company recorded a net other expense of $64,953, including a loss on the change in fair market value of derivative liability.
• Preferred stock dividend expenses amounted to $23,102.
• The company's cash balance decreased to $17,861 as of March 31, 2025.
• Management is considering options including vetting suitable companies to merge with or acquire them.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to the company's financial struggles, going concern uncertainty, and lack of revenue. While there are some positive aspects, the overall tone is concerning from an investment perspective.

Positives

• The company received an employee retention credit from the IRS totaling $8,882 in February 2025.
• The company believes its strategic partnership continues to be its greatest asset.
• The company believes its assets have potential future revenue growth, that will be attractive to prospective partners interested in an acquisition or merger.

Negatives

• The company has suffered continuing operating losses and has a significant accumulated deficit.
• There is substantial doubt about the company's ability to continue as a going concern.
• No revenues were recorded in Q1 2025.
• The company has a working capital deficit of $2,826,576.
• The company's DOT Bridge Monitoring Contract ended in December 2023 and the monitoring program has been suspended with no foreseeable plans to restart the program.
• The company has not been able to raise material funds for ongoing operations through its existing financing agreements due to market conditions.
• The CEO and COO have received negligible compensation and have accrued almost all compensation since mid-April 2023 and the lack of funds has severely limited sales and marketing efforts.

Risks

• The company's ability to generate sufficient liquidity to maintain its operations is uncertain.
• Potential future revenue growth depends on the company's ability to raise additional capital.
• The company faces challenges in raising adequate funds for ongoing operations.
• The company's DOT Bridge Monitoring Contract ended in December 2023 and the monitoring program has been suspended with no foreseeable plans to restart the program.
• The company has not been able to raise material funds for ongoing operations through its existing financing agreements due to market conditions.
• The CEO and COO have received negligible compensation and have accrued almost all compensation since mid-April 2023 and the lack of funds has severely limited sales and marketing efforts.

Future Outlook

The company's future revenue growth is uncertain and depends on its ability to raise additional capital and secure new contracts. Management is considering options including vetting suitable companies to merge with or acquire them.

Management Comments

• Our management continues to secure limited funding from our lead investor to pay for ongoing expenses and our leadership team is considering our options for both the short and long term.
• 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 Industrial Internet of Things (IIoT) sector, specifically focusing on edge computing systems. The global smart manufacturing market is projected to reach $479 billion by 2029, and the worldwide structural health monitoring industry is projected to reach $4.1 billion by 2029.

Comparison to Industry Standards

• It's difficult to compare IIOT-OXYS directly to industry giants like Siemens, Honeywell, or General Electric, as these companies have diversified revenue streams and established market positions.
• Smaller, specialized companies in the IIoT space, such as PTC or Telit, might offer a more relevant comparison, but their financial performance isn't fully detailed in this document.
• The company's lack of revenue in Q1 2025 is a significant concern, as most comparable companies are actively generating revenue and expanding their market presence.
• The company's reliance on convertible preferred stock for financing is also a deviation from industry norms, as most established companies rely on a mix of debt and equity financing.

Related Party Transactions

• Convertible note payable to a related party (director) with interest at 12% per annum, convertible at any time into shares of common stock at $0.0006 per share.
• The Company leases its current office facility from two stockholders on a month-to-month basis at a monthly rent of $250 starting January 1, 2020.

Stakeholder Impact

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

Next Steps

• The company needs to secure additional funding to maintain operations and pursue revenue growth.
• Management is considering options including vetting suitable companies to merge with or acquire them.
• The company needs to address the material weakness in internal control over financial reporting.

Key Dates

Keywords

financial results, going concern, net loss, IIOT-OXYS, deficit, preferred stock, convertible notes, liquidity, operating losses, capital raise