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GOING CONCERN CONSIDERATIONS
3 Months Ended
Mar. 31, 2013
GOING CONCERN CONSIDERATIONS [Abstract]  
GOING CONCERN CONSIDERATIONS

NOTE 3. GOING CONCERN CONSIDERATIONS

 

The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company had negative cash flows from operating activities of $7.2 million for the quarter ended March 31, 2013, an accumulated deficit of $73.4 million at March 31, 2013 and working capital of $12.4 million at March 31, 2013. The Company's current assets at March 31, 2013 included $20.6 million of receivables (consisting of $0.6 million of net notes receivable, $11.9 million of accounts receivable and $8.1 million of receivables from advances to aggregators). These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

The Company plans to increasingly generate most of its revenues from the payment processing operations of its subsidiary TOT Group. Failure to successfully continue developing the Company's payment processing operations and maintain contracts with merchants, mobile phone carriers and content providers to use TOT Group's services, or failure to expand the Company's base of advertisers or generate and maintain high quality content on its websites, could harm the Company's revenue prospects. The Company faces all of the risks inherent in a new business, including management's potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with developing its technologies, Internet websites and operations.

 

The Company is continuing with its plan to further grow and expand its payment processing operations and leverage its existing entertainment and culture assets in emerging markets, particularly in Russia and surrounding countries. Management believes that its current operating strategy will provide the opportunity for the Company to continue as a going concern as long as we are able to obtain additional financing; however, there is no assurance this will occur. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The independent auditors' report on the Company's consolidated financial statements for the year ended December 31, 2012 contains an explanatory paragraph expressing substantial doubt as to the Company's ability to continue as a going concern.