NOTE 3. LIQUIDITY AND GOING CONCERN CONSIDERATIONS

Our condensed 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. For the quarter ended June 30, 2017, we sustained a net loss of $1.7 million and have an accumulated deficit of $161.6 million. Furthermore, we had $5.2 million of negative working capital at June 30, 2017. We sustained a net loss of $13.6 million for the year ended December 31, 2016 and have an accumulated deficit of $157.4 million and a negative working capital of $6.3 million at December 31, 2016. The conditions above plus the risk of our ability to secure sufficient financing in order to pay such obligations raise substantial doubt about our ability to continue as a going concern.

Failure to successfully continue developing our payment processing operations and maintain contracts with merchants, mobile phone carriers and content providers to use TOT Group’s services could harm our revenues and materially adversely affect our financial condition and results of operations. We face all of the risks inherent in a new business, including the need for significant additional capital, management’s potential underestimation of initial and ongoing costs, and potential delays and other problems in connection with developing our technologies and operations.

We are continuing with our plan to further grow and expand our payment processing operations in the United States and emerging markets and seek sources of capital to expand and pay our contractual obligations as they come due. Management believes that its current operating strategy will provide the opportunity for us 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 condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

We are required to continually meet the listing requirements of The Nasdaq Capital Market (including a minimum bid price for our common stock of $1.00 per share) to maintain the listing of our common stock on The Nasdaq Capital Market. On November 14, 2016, the bid price of our common stock fell below $1.00 and stayed below $1.00 for 30 consecutive business days. On December 28, 2016, we received a letter from Nasdaq providing us 180 days (until June 26, 2017) to regain compliance. The Company did not regain compliance and received a delisting notice from Nasdaq on June 27, 2017. The Nasdaq Listing Qualifications Staff determined that the Company had not regained compliance with the $1.00 per share minimum bid price requirement of the Nasdaq Listing Rules as of June 26, 2017. Further, the Company is not eligible for an extension of such period due to the value of the Company’s stockholders’ equity (as reported by the Company in its quarterly report on Form 10-Q filed with the with the Commission on May 15, 2017) being less than the minimum $5 million stockholders’ equity listing requirement for The Nasdaq Capital Market. We filed an appeal to the delisting with Nasdaq on July 5, 2017 and subsequently presented our appeal at a hearing with Nasdaq on August 10, 2017. We are currently awaiting the decision of the Nasdaq appeals board, which we expect to receive in August 2017.

Any delisting of our common stock from The Nasdaq Capital Market could adversely affect our ability to attract new investors, reduce the liquidity of our outstanding shares of common stock, reduce our flexibility to raise additional capital, reduce the price at which our common stock trades and increase the transaction costs inherent in trading such shares with overall negative effects for our stockholders. In addition, delisting of our common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, and might deter certain institutions and persons from investing in our securities at all. For these reasons and others, delisting could adversely affect our business, financial condition and results of operations. See Note 17.

The independent auditors’ report on our consolidated financial statements for the years ended December 31, 2016 and 2015 contain an emphasis paragraph expressing substantial doubt as to our ability to continue as a going concern.