Going Concern and Management's Plans
|12 Months Ended|
Dec. 31, 2019
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|Going Concern and Management's Plans||
2. Going Concern and Management’s Plans
At December 31, 2019, the Company’s principal sources of liquidity were its cash and cash equivalents and the net proceeds from the sales of shares in 2019.
The Company had an accumulated deficit of ($88,671,260) at December 31, 2019. During the year ended December 31, 2019, the Company generated a net loss from continuing operations of ($2,792,129) and used cash in continuing operations of $3,289,736. At December 31, 2019, the Company had a cash balance of $633,615. Total revenues were approximately 5,025,000 and $7,621,000 for the years ended December 31, 2019 and 2018, respectively. The Company had a working capital deficiency from continuing operations of approximately ($2,114,000) and ($3,384,000) at December 31, 2019 and 2018, respectively. These conditions raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company is closely monitoring operating costs and capital requirements. Management of the Company also made efforts in 2018 and 2019 to contain and reduce cost, including implementing a new approval process over travel and other expenses, significantly reducing the cash compensation for independent board directors, terminating non-performing employees and eliminating certain positions, and replacing and negotiating with certain vendors. We also sold our Noble Voice business on May 25, 2018 to reduce operating losses and cash burns. If we are still not successful in sufficiently reducing our costs, we may then need to dispose our other assets or discontinue business lines.
From January 9, 2019 to November 15, 2019, the Company sold approximately 3,789,487 shares of its common stock at a purchase price ranging from $1.146 to $3.96 per share, in return of $5,514,601 gross proceeds under several private placements. All of the purchasers are not “U.S. person”, not acting for the account or benefit of “U.S. person”.
On November 15, 2019, an existing shareholder, CFL, purchased an additional 1,142,857 shares of the Company’s Common Stock at a price of $1.75 per share from an existing shareholder. This increases their total ownership stake to 38.5% of the total outstanding, issued shares of the Company.
On March 22, 2020, the Company entered into an agreement with Malven Group Limited, a company established under the laws of the British Virgin Islands (“Malven”), in connection with the purchase by Malven of 1,939,237 shares of common stock of the Company (collectively the “Shares”) at a price of $0.7735 per share for gross proceeds of $1,500,000. The closing of the transaction took place on March 30, 2020.
Management believes that its available funds and cash flow from operations may not be sufficient to meet our working capital requirements for the twelve months subsequent to the issuance of our financial statements. In order to accomplish its business plan objectives, the Company will need to either increase revenues or raise capital by the issuance of common stock, or strategic merge and acquisitions. Management believes that it will be successful in obtaining additional financing based on its limited history of raising funds; However, there can be no assurances that our business plans and actions will be successful, that we will generate anticipated revenues, or that unforeseen circumstances will not require additional funding sources in the future or effectuate plans to conserve liquidity. Future efforts to raise additional funds may not be successful or they may not be available on acceptable terms, if at all. In addition, due to China’s foreign currency control, the Company cannot move money between China and the USA freely. The People’s Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate the flow of foreign exchange in and out of the country strictly. We need to get approval from Chinese government to move money from China to the U.S. which might take extra time.
The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef