10-Q: IMA Tech Q1 2026: Revenue Dip, Net Loss Widens Amid Growth Strategy

IMA Tech reported a wider net loss and slight revenue decrease in Q1 2026, while improving cash flow from operations and addressing going concern doubts.

Summary

• Net loss for the three months ended July 31, 2025, increased to $20,862 from $17,120 in the prior year period.
• Revenue decreased slightly to $4,400 for the quarter, compared to $4,700 in the same period last year.
• Operating expenses rose to $25,262 from $21,820, primarily due to increased general and administrative expenses.
• Cash balance significantly improved to $11,938 as of July 31, 2025, up from $4,500 on April 30, 2025.
• Net cash provided by operating activities was $7,538, a positive shift from net cash used of $10,269 in the prior year.
• The company reported a negative working capital of $266,978 and an accumulated deficit of $103,799, raising substantial doubt about its ability to continue as a going concern.
• Liliia Havrykh, CEO, cancelled 2,500,000 restricted shares on August 7, 2025, reducing total outstanding shares to 2,609,878 as of September 10, 2025.
• Two new directors, Mateusz Jakubowski and Daniel Jozef Szaruga, were appointed to the Board on August 11, 2025.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including a widening net loss, accumulated deficit, and going concern doubts. While cash flow from operations improved and new directors were appointed, the fundamental business performance (revenue decline, increased loss) and ineffective disclosure controls indicate high risk.

Positives

• Cash balance increased significantly to $11,938 from $4,500 quarter-over-quarter.
• Net cash provided by operating activities improved to $7,538, a positive reversal from net cash used of $10,269 in the prior year period.
• Deferred revenue increased to $15,416 from $4,400, indicating more pre-paid customer contracts.
• Appointment of two new independent directors enhances corporate governance.

Negatives

• Net loss widened to $20,862 from $17,120 in the comparable prior year period.
• Revenue decreased slightly to $4,400 from $4,700 year-over-year.
• Operating expenses increased to $25,262 from $21,820.
• Accumulated deficit grew to $103,799, indicating continued unprofitability since inception.
• Negative working capital of $266,978 highlights significant short-term liquidity challenges.
• Management concluded that disclosure controls and procedures were not effective as of July 31, 2025.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring losses and accumulated deficit.
• Reliance on future profitable operations and/or securing additional funding (director loans, private stock offering) to meet obligations.
• Exposure to various federal, state, and international laws and regulations concerning privacy, data protection, internet, content, advertising, and anti-corruption, which could increase compliance costs and regulatory scrutiny.
• Ineffective disclosure controls and procedures, which could lead to material information not being recorded, processed, summarized, or reported timely.

Future Outlook

Management plans to finance operational expenses for the next twelve months using available cash, loans from directors, and/or a private offering of Common Stock. The company intends to continuously invest in research and development to improve AI avatar capabilities, explore partnerships or acquisitions, enhance customer experiences, position AI avatars as a cost-saving solution, develop a comprehensive marketing strategy, and prioritize data security and privacy.

Management Comments

• Management plans to finance operational expenses for the next twelve months by using available cash on hand, as well as loans from directors and/or a private offering of Common Stock.
• The Company may consider hiring more employees if the need arises.
• Our business strategy is centered around utilizing AI avatars to simplify customer requests, reduce costs, and save time for implementation.

Industry Context

IMA Tech operates in the rapidly evolving AI and digital avatar industry, which is experiencing significant growth driven by demand for personalized digital experiences and automation. The company's focus on AI-powered image and video generation, coupled with multilingual support, positions it within a competitive landscape where innovation in natural language processing and machine learning is crucial. The industry is also subject to increasing regulatory scrutiny regarding data privacy and content, which could impact operational costs and business models.

Management Changes

Corporate Governance

Related Party Transactions

• The CEO and sole director, Liliia Havrykh, has advanced funds to the company through a loan facility.
• As of July 31, 2025, the outstanding loan from related parties was $252,698, with $100 repaid during the quarter.
• The loan facility was most recently amended on December 16, 2024, increasing the total amount to $300,000.
• The loan is interest-free and has a maturity date of March 29, 2028.

Stakeholder Impact

• Shareholders: Face significant dilution risk if a private offering of common stock is pursued. The cancellation of 2,500,000 restricted shares by the CEO could be seen as a positive signal of commitment or a restructuring of ownership. The going concern doubt poses a substantial risk to investment value.
• Creditors: The company's negative working capital and going concern doubt indicate elevated credit risk, though the primary creditor is a related party (CEO).
• Employees: Currently only one employee (CEO), so direct impact is minimal, but future hiring plans depend on improved financial health.
• Customers: Continued development of AI avatars and multilingual support aims to enhance customer experience, but the company's financial instability could pose long-term service risks.

Next Steps

• Generate profitable operations and/or secure required funding to address going concern issues.
• Continuously invest in research and development to improve AI avatar capabilities (NLP, ML, data analytics).
• Explore partnerships or acquisitions to augment technology stack and expand offerings.
• Emphasize delivering exceptional customer experiences.
• Develop a comprehensive marketing and branding strategy.
• Maintain a strong focus on innovation.
• Prioritize security and privacy of customer data.
• Address the ineffectiveness of disclosure controls and procedures.

Key Dates

Recommendation

IMA Tech exhibits severe financial distress, including a widening net loss, substantial accumulated deficit, and negative working capital, leading to a 'going concern' warning. While cash flow from operations improved, the core business revenue declined, and operating expenses increased. The acknowledged ineffectiveness of disclosure controls further compounds the risk profile. Despite new board appointments, the company's fundamental financial health and reliance on related-party financing or future capital raises without a clear path to profitability make it a highly speculative and risky investment.

Keywords

AI avatars, Artificial Intelligence, Digital Avatars, SEC 10-Q, Financial Report, Software Development, Corporate Governance, Startup, Technology, Wyoming