Southern ITS International, Inc.

What they do

Southern ITS International, Inc. develops and delivers electronic security, networking, and compliance systems to government-regulated industries including gaming and corrections. It is expanding into the medical and recreational marijuana (MMJ/MJ) market with payment and auditing technology, such as the Greeniosk secure cash payment system. The company describes itself as a start-up stage operation with limited resources and a lower-tier market position.

Revenue drivers

• Security and compliance systems — Historically provides proprietary equipment and services to gaming and corrections sectors; revenue is generated from installations and warranties, but no segment breakdown is provided.
• Greeniosk secure cash payment system — A payment-to-sales kiosk for marijuana dispensaries that accepts cash, prints encrypted vouchers, and produces audit trails; the company states it is expanding this to the MMJ/MJ market.
• Seeds-to-Sales software and hardware — Integrated inventory and audit trail management for cannabis businesses; complementary to Greeniosk but no separate revenue figures are disclosed.
• MMJ/MJ compliance technology — New patent-pending equipment and systems aimed at FinCEN and banking regulations for all-cash businesses; described as an emerging focus with no reported revenue yet.

Recent performance

For the nine months ended September 30, 2016, the company reported revenues of $409,057 compared to $727,680 for the same period in 2015. Costs of services were $88,016 and $464,689 for the 2016 and 2015 periods, respectively. Operating expenses were $238,046 in the 2016 period, consisting of professional fees of $1,500, wages of $90,742, and general and administrative expenses of $145,804. Net profit for the nine months ended September 30, 2016, was $59,337 compared to a net loss of $19,375 for the nine months ended September 30, 2015. As of September 30, 2016, total assets were $54,469 and total liabilities were $3,040,042.

Strategy

Management's plan for the twelve months ending December 31, 2016, is to expand historical operations in high-compliance industries and deliver auditing and compliance technology to the MMJ/MJ market. The company continues developing patent-pending equipment and systems addressing MMJ/MJ government and banking regulations, specifically FinCEN problems for all-cash businesses. It markets through networking, telephone and print ads, and industry conventions, competing on pricing and flexibility of installation timing. No specific capital expenditure or financing plans are disclosed.

Risks

• Going concern uncertainty — The company states there is substantial doubt about its ability to continue as an ongoing business for the next twelve months.
• No revenues from business operations — Management states the company is a development stage corporation with limited operations and no revenues from business operations, and does not anticipate significant revenues until it raises significant funds.
• Financing and dilution risk — The company has no assurance that future financing will be available on acceptable terms, and equity financing could result in additional dilution to existing shareholders.
• Negative shareholder equity — As of September 30, 2016, total liabilities of $3,040,042 exceeded total assets of $54,469, resulting in shareholder equity of negative $3.0 million.

Outlook

Management plans to expand operations and deliver compliance technology to the MMJ/MJ market, but states it does not anticipate significant revenues until it raises significant funds. The company cautions that there is no assurance it will ever generate revenue even if it raises all necessary funds. It faces risks inherent in a new business enterprise, including limited capital resources and possible cost overruns.