Quarterly report pursuant to Section 13 or 15(d)

Management's Plans

v3.10.0.1
Management's Plans
6 Months Ended
Jun. 30, 2018
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Management's Plans

Note 6. Management’s Plans

 

On August 27, 2014, FASB issued ASU 2014-05, Disclosure of Uncertainties about an Entity’s ability to Continue as a Going Concern, which requires management to assess a company’s ability to continue as a going concern within one year from financial statement issuance and to provide related footnote disclosures in certain circumstances.

 

The Company has experienced significant operating losses over the past 2 years (2016 and 2017) with net income generated in 2018 primarily resulting from a litigation reversal of $405,000 and a $200,000 insurance reimbursement for legal fees for the six -month period ended June 30, 2018 with cumulative losses of approximately $10 million as a result of declining revenues and high expenses due to a number of factors.  These losses resulted in the usage of all cash proceeds from the Company’s initial public offering in 2015.  

 

The Company started a number of initiatives in 2017 which included cost saving initiatives, a focus on collections and a resolve to settle its outstanding debt. The Company initiated a reduction in its workforce from 2017 through 2018 which resulted in the workforce decreasing from 19 full time employees to 10 full time employees, a reduction in marketing expenses and a reduction in other controllable expenses.

 

The Company was also able to settle the $4,720,860 promissory note that had been due in April 2018 along with accrued interest and other costs with its primary creditor in exchange for 2,953,189 common shares and repay its other outstanding promissory note of $717,500 during the twelve months ended December 31, 2017.  The Company then obtained a $500,000 senior secured convertible note which is intended to provide sufficient working capital.  The new financing arrangement is expected to provide the Company with sufficient liquidity to operate for the next 12 months.

 

The Company will also continue to explore ways to unlock value across a range of assets, including exploring ways to maximize the value of our unsecured debt owed by current and former owners of the condominium units.  

 

The cost saving initiatives, a focus on collections, the settlement of certain of the Company’s debt obligations and the generation of additional working capital from new financing should avoid any substantial doubt about the Company’s ability to continue as a going concern as defined by ASU 2014-05.  

 

We believe that the actions discussed above mitigate the substantial doubt raised by our recent operating losses and satisfy our estimated liquidity needs for the 12 months from the issuance of these financial statements.  However, we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional debt financing, or whether such actions would generate the expected liquidity as currently planned. Additionally, a failure to generate additional liquidity could negatively impact our ability to acquire units.