IIOT-OXYS: Pre-revenue, $41K cash, big convertible liabilities and going-concern risk

Snapshot - IIOT-OXYS, Inc. (PINK: ITOX)

What's happening inside the company
- The company remains early-stage / largely pre-revenue and recorded no revenues in Q2 2025 (and none for the six months ended June 30, 2025).
- Management continues to fund operations via sale of convertible preferred stock (Series C & D) and convertible notes; recent financings produced net cash provided by financing of $130,180 for the six months ended June 30, 2025.
- Cash increased to $41,047 at June 30, 2025 (from $23,593 at December 31, 2024) but operating cash burn persists: net cash used in operating activities was $(112,726) for the six months ended June 30, 2025.
- The company carries meaningful derivative liabilities and preferred mezzanine liabilities tied to convertible preferred instruments; management discloses substantial doubt about the company's ability to continue as a going concern absent additional capital.

Key financial facts & statistics (as reported)
- Cash and cash equivalents (6/30/2025): $41,047.
- Total Assets (6/30/2025): $165,950.
- Intangible assets, net: $124,903.
- Total Current Liabilities: $2,804,713; Total Liabilities: $2,805,713.
- Derivative liabilities (6/30/2025): $697,935 (down from $758,787 at 12/31/2024).
- Preferred stock mezzanine/liabilities: Series B $699,600; Series C $68,400; Series D $169,200 (6/30/2025).
- Accumulated deficit (6/30/2025): $(11,438,976).
- Working capital deficit (MD&A): $2,763,666.
- Net loss - three months ended 6/30/2025: Net loss ($25,329); Net loss attributable to common stockholders: ($50,411).
- Net loss - six months ended 6/30/2025: Net loss ($182,540); Net loss attributable to common stockholders: ($230,724).
- Operating expenses - Q2 2025: $120,973; Six months 2025: $213,231.
- Interest expense - Q2 2025: ($108,916); Six months 2025: ($184,291).
- Gain on change in fair value of derivative liability - Q2 2025: $212,547 (contributed to positive Other Income in the quarter).
- Shares outstanding (reported Sept 19, 2025): 566,315,293; Weighted average shares (basic & diluted) used in EPS: ~560,776,831 (Q2 2025).
- Potential issuable shares (anti-dilutive, 6/30/2025): 780,922,851 (convertible notes + preferred), highlighting risk of severe dilution.

Positive aspects of the income statement / recent results
- Q2 2025 benefited from a sizable non-cash gain on the change in fair value of derivative liability: $212,547, which turned other items into net other income for the quarter and materially reduced the reported net loss versus the prior-year quarter.
- Cash position improved modestly to $41,047 after financings; the company raised proceeds from Series C and D preferred sales (cash received from sale of convertible preferred stock $141,000 in six months ended 6/30/2025).
- Amortization and non-cash charges are predictable (intangible amortization $12,341 per quarter), which makes a portion of expense run-rate visible.

Negative aspects of the income statement / concerns
- No product/service revenue in Q2 2025 (Revenues $0), and no recurring sales recognized in the six months ended 6/30/2025 - continued pre-revenue status increases reliance on financing.
- Operating expenses remain non-trivial: $120,973 in Q2 and $213,231 YTD; compounded by high interest expense ($108,916 Q2) primarily tied to convertible preferred issuances and notes.
- Preferred dividends and interest further widen losses: Convertible preferred stock dividend $25,082 in Q2; interest expense and dividend obligations reduce available cash for operations.
- Large derivative and mezzanine liabilities ($697,935 derivative + $937,200 aggregate stated values of preferred mezzanine liabilities across series) create earnings volatility (fair-value gains/losses) and future dilution risk.
- Substantial dilution risk: ~780.9 million potentially issuable shares from convertibles/preferred (excluded from diluted EPS as anti-dilutive) - could massively dilute common holders if converted.
- Working capital deficit of $2,763,666 and accumulated deficit $(11,438,976) - company discloses substantial doubt about going concern without additional capital.
- Management concluded disclosure controls were not effective as of 6/30/2025 - governance/controls weakness noted.

Bottom line / near-term outlook
- IIOT-OXYS, Inc. (PINK: ITOX) remains an early-stage, capital-dependent technology developer with IP (intangible assets $124,903) and use cases in structural health monitoring and smart manufacturing, but it produced no revenue in Q2 2025.
- Recent preferred financings bought modest runway (cash up to $41k) but operating cash burn, heavy convertible/preferred liabilities, preferred dividends, and large potential dilution are material risks. Management is actively seeking additional capital or strategic alternatives (merger/acquisition) to address the going-concern issue.
- For investors: key near-term items to watch - successful capital raises, signed revenue contracts / conversion of POCs to paid SaaS, changes in derivative fair values, and any dilutive conversions or debt restructurings.

Sources: IIOT-OXYS, Inc. Form 10‑Q for quarter ended June 30, 2025 (financial statements and MD&A).