Citation Checker: Audit an AI Summary Against Its Source

Citation Check: Project Sentinel Summary

Summary checked: "Sentinel has a well-diversified customer base with no customer above 15% of revenue, 78% recurring revenue, and TTM revenue of $6.21M growing about 7% a year."

Sources: Project Sentinel CIM (24 pages) and Sentinel Financial Statements (5 pages, unaudited, management-prepared). Every page of both was read. Citations use the printed page numbers.

Bottom line: One of the four claims is fully supported. Two are overstated. One is contradicted by the source and is the dangerous one: the "no customer above 15%" claim is false by the CIM's own figures.

1. Claims fully supported by the source

TTM revenue of $6.21M.

• CIM p.6: "Total revenue for the trailing twelve months was $6.21M."
• FS p.2: "Total revenue for the trailing twelve months was $6.21M, up from $5.78M and $5.34M in the two prior years."
• The two documents agree. Note that FS p.1 and p.5 state the statements are unaudited and management-prepared.

2. Claims that are partially supported or overstated

"78% recurring revenue". The number matches the CIM, but the gap is in what "recurring" means.

• CIM p.7: "Approximately 78% of revenue is recurring under multi-year inspection agreements, with the balance from repair, installation and emergency call-out work."
• CIM p.22 defines the term: "Recurring revenue is defined by the Company as all revenue from accounts holding an active inspection agreement, inclusive of any repair or call-out work performed for those accounts during the period." The CIM itself tells buyers to "note this definition when comparing recurring-revenue figures to their own conventions."
• Gap: the 78% includes repair and call-out work, which the CIM says on p.7 "varies with building age and incident volume." It is not contracted inspection revenue alone. The summary presents 78% as plain recurring revenue and drops the definition. The CIM does not give the share of revenue from inspection agreements only.

"growing about 7% a year". The growth is derived, not stated, and it is not constant.

• The CIM and FS never state a growth rate. CIM p.6 says only that growth was "driven by net new inspection agreements and modest price increases."
• FS p.2 gives revenue of $5.34M, $5.78M and $6.21M. Computed from those figures: the latest year is +7.4% ($6.21M / $5.78M), and the prior year is +8.2% ($5.78M / $5.34M). The two-year average is about 7.8%.
• Gap: "about 7%" fits the latest year only if rounded down from 7.4%, and understates the earlier year. The figure is the summary's own calculation, not a source statement. Also, CIM p.6 attributes part of the growth to price increases, so "7% a year" is not volume growth. The CIM does not break out the price versus volume split.

3. Claims that cannot be found in the source, or are contradicted by it

"Well-diversified customer base with no customer above 15% of revenue". CONTRADICTED.

• The summary repeats CIM p.8: "Its customer base is well diversified, with no single customer representing more than 15% of revenue."
• CIM p.9 contradicts this: "Account A (Northgate Property Group), $1,366,000" and "Northgate Property Group represents approximately 22% of total revenue."
• Check on the arithmetic: $1,366,000 / $6.21M = 22.0%, so the p.9 figure is internally consistent with the TTM revenue. The largest account is about 7 points above the 15% ceiling.
• CIM p.23 also lists "customer concentration in the largest account" as a key risk.
• The top ten accounts are about 61% of revenue (CIM p.9). The five largest named accounts total $3,030,000 ($1,366,000 + $544,000 + $431,000 + $388,000 + $301,000), about 48.8% of $6.21M.
• "Well diversified" is management's own characterization (CIM p.8 and p.9: "Management considers the base appropriately diversified for a business of this size"). It is an opinion, and the numbers on p.9 do not support it as the summary states it.
• The financial statements contain no customer data, so the FS cannot confirm or refute any concentration claim.

4. Numbers in the summary that differ from the source

Recommended correction

Replace the summary with something the sources support: "TTM revenue was $6.21M (CIM p.6, FS p.2), up 7.4% from $5.78M and 8.2% the year before (FS p.2, computed). The CIM reports about 78% recurring revenue, defined to include repair and call-out work for accounts with an inspection agreement (CIM p.7, p.22). Customer concentration is material: Northgate Property Group is about 22% of revenue and the top ten accounts are about 61% (CIM p.9), which the CIM itself lists as a key risk (CIM p.23)."

This check is an analytical aid and not investment, legal, tax or accounting advice. Both documents are synthetic test data.