Going Concern Evaluation

3 Months Ended

Mar. 31, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Going Concern Evaluation

4. Going Concern Evaluation

In connection with preparing consolidated financial statements for the three months ended March 31, 2017, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued.

The Company considered the following:

• Operating losses for eight consecutive quarters.

• Negative cash flow from operating activities for four consecutive quarters.

• Depressed stock price resulting in being non-compliant with NASDAQ listing rules to maintain a stock price of $1.00/share.

• Stockholders’ equity being less than $2.5 million at March 31, 2017 resulting in being non-compliant with NASDAQ listing rules.

Ordinarily, conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern relate to the entity’s ability to meet its obligations as they become due.

The Company evaluated its ability to meet its obligations as they become due within one year from the date that the financial statements are issued by considering the following:

• The Company raised $4.0 million of debt financing during the year ended December 31, 2016.

• The Company has been able to raise capital from short-term loans from its Board members.

• As a result of the Company’s restructuring that was implemented during the three months ended December 31, 2016, and again during the three months ended March 31, 2017, the Company’s cost structure is now in line with its current baseline revenue projections going forward.  See Footnote 6 below for additional details regarding restructuring.

Management believes that the Company will generate enough cash from operations to satisfy its obligations for the next twelve months.

The Company will take the following actions, if it starts to trend unfavorable to its internal profitability and cash flow projections, in order to mitigate conditions or events that would raise substantial doubt about its ability to continue as a going concern:

• Raise additional capital through short-term loans.

• Implement additional restructuring and cost reductions.

• Raise additional capital through a private placement.

• Secure a commercial bank line of credit.

• Dispose of one or more product lines.

• Sell or license intellectual property.