10-Q: Welsis Corp. Reports Net Income of $9,359 for Nine Months Ended June 30, 2024, Amidst Going Concern Uncertainty

Welsis Corp. reports a net income of $9,359 for the nine months ended June 30, 2024, a significant improvement compared to the previous year's net loss, but faces going concern challenges.

Summary

• Welsis Corp., a development-stage company focused on virtual psychological therapy, reported its financial results for the quarter ended June 30, 2024.
• The company was established on August 16, 2021, and has been incurring losses since its inception.
• For the nine months ended June 30, 2024, Welsis Corp. reported a net income of $9,359, compared to a net loss of $40,700 for the same period in 2023.
• The improvement was primarily due to a gain on debt forgiveness of $55,000 related to the acquisition of a mobile application and website.
• Revenue for the nine months ended June 30, 2024, was $2,000, compared to $7,900 for the same period in 2023.
• Operating expenses for the nine months ended June 30, 2024, were $43,979, compared to $45,608 for the same period in 2023.
• As of June 30, 2024, the company had no cash and cash equivalents, and a working capital deficiency of $22,113.
• The company's financial statements have been prepared assuming it will continue as a going concern, but there is substantial doubt about its ability to do so.
• The company is attempting to commence operations and generate sufficient revenue, and management intends to raise additional funds through private or public offerings.
• On April 1, 2024, Skywest Pinnacle Limited acquired approximately 73% of the issued and outstanding shares of Common Stock of the Company, gaining unilateral control.
• Effective April 1, 2024, Kwok Boon Kit was appointed as Chief Executive Officer, Treasurer and Secretary, and Director of the Company, replacing Dusan Zindovic.

Sentiment

Score: 4

Explanation: The sentiment is cautiously negative. While the company reports net income, it is largely due to debt forgiveness and the company faces significant going concern risks and a lack of cash.

Positives

• The company achieved a net income of $9,359 for the nine months ended June 30, 2024, compared to a net loss of $40,700 in the prior year.
• The gain on debt forgiveness of $55,000 significantly boosted the company's financial performance.
• Operating expenses decreased slightly from $45,608 to $43,979 year over year for the nine month period.
• The company is actively working to commence operations and generate revenue.

Negatives

• The company had no cash and cash equivalents as of June 30, 2024.
• The company has a working capital deficiency of $22,113 as of June 30, 2024.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.
• Revenue decreased from $7,900 to $2,000 year over year for the nine month period.

Risks

• The company's ability to continue as a going concern is uncertain and dependent on raising additional funds and generating sufficient revenue.
• The company may face challenges in implementing its business plan and generating sufficient revenue.
• Additional issuances of equity or convertible debt securities could result in dilution for current shareholders.
• The company's disclosure controls and procedures were deemed not effective as of the end of the reporting period.

Future Outlook

The company expects to require additional capital to meet its long-term operating requirements and plans to raise additional capital through the sale of equity or debt securities. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next three months.

Management Comments

• Management intends to raise additional funds by way of a private or public offering.
• Management believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds.

Industry Context

The company operates in the growing telehealth and telepsychology services market, which has seen increased demand due to factors such as increased accessibility and convenience. However, the company faces competition from established players and other startups in the space.

Comparison to Industry Standards

• It is difficult to compare Welsis Corp. to industry standards due to its early stage of development and limited revenue.
• Companies like Teladoc Health and Amwell are established players in the telehealth market with significantly higher revenue and market capitalization.
• Welsis Corp.'s reliance on debt forgiveness and related party transactions is not typical of more mature companies in the industry.

Management Changes

Related Party Transactions

• During the nine months ended June 30, 2024, the Company incurred debt forgiveness of $53,015, comprised of $38,615 for payable amount to the Company's director, who will resign on April 1, 2024 upon the change of control and $14,400 for payable amount to the Company's majority shareholder.
• As of June 30, 2024 and September 30, 2023, the amount due to the related parties was $0 and $27,315, respectively.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances.
• Employees face uncertainty due to the company's going concern risk.
• Customers may be impacted by the company's ability to provide services if it cannot secure additional funding.

Next Steps

• The company intends to finance expenses with further issuances of securities and debt issuances.
• The company will seek to obtain short-term loans from its directors.

Key Dates

Keywords

Welsis Corp, teletherapy, telepsychology, financial results, going concern, debt forgiveness, net income, mobile application, Skywest Pinnacle Limited, Kwok Boon Kit