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Liquidity, Financial Condition and Management's Plans

9 Months Ended

Sep. 30, 2016

Liquidity Financial Condition And Managements Plans

Liquidity, Financial Condition and Management's Plans

Note 3 - Liquidity, Financial Condition and Management’s Plans

For the nine months ended September 30, 2016 and 2015, the Company recognized a net loss of approximately $26.9 million and a net loss of approximately $8.4 million, respectively. The Company had no cash and cash equivalents outstanding and a working capital deficiency of approximately $24.3 million at September 30, 2016, which includes $20 million for the fair value of derivative liabilities. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans.

The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer term business plan. The Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all.

Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying consolidated financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern.

The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by:

	●	managing current cash and cash equivalents on hand from the Company’s past debt and equity offerings, by controlling costs, and

	●	seeking additional financing through sales of additional securities.

	●	In order to raise capital, the Company needs to increase its authorized Common Stock. On December 16, 2016, the Company filed a preliminary Information Statement with the Securities and Exchange Commission disclosing it has obtained approval from its shareholders to effect a reverse stock split and maintain the number of authorized shares of Common Stock at current levels. The consent was executed by the Company’s CEO as the holder of super voting preferred stock. See Note 13.