NRTI- Important Facts based on their most recent filings with the SEC
Liquidity and Capital Resources
The Company’s future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing. Management believes they can raise the appropriate funds needed to support their business plan and develop an operating, cash flow positive company. The Company has been operating with negative cash flows for the past 13 years.
The Company incurred substantial net losses for the six months ended June 30, 2015 and the year ended December 31, 2014 and has accumulated a deficit of $96,686,111 at June 30, 2015. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has never reported Net Income.
The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.
The Company’s business operations generally have been financed by debt investments through promissory notes with accredited investors. During the six months of 2015, the Company obtained new debt from the issuance of promissory notes that supplied the funds that were needed to finance operations during the reporting period. The new issuance of debt requires conversion of existing debt which may not be able to convert on favorable terms. Such new borrowings resulted in the receipt by the Company of $632,500. While these funds sufficed to compensate for the negative cash flow from operations they were not sufficient to build up a liquidity reserve. As a result, the Company’s financial position at the end of the reporting period showed a working capital deficit of $12,832,531. During the first six months of 2015 the Company obtained new financing sufficient to fund ongoing working capital requirements. We need to continue to raise funds to cover working capital requirements until we are able to raise revenues to a point of positive cash flow.
The Company was not able to make the payments that were due July 1, 2014, January 1, 2015 and April 1, 2015 to Martha Stewart Living Omnimedia (“MSLO”) pursuant to our license agreement. On April 25, 2015, the Company received notice from MSLO that the license agreement shall terminate on May 16, 2015. The Company has the right to sell off the licensed products for a period of six months. All MSLO inventory has been 100% reserved in the accompanying financial statements. The Company has an accrued liability of $1,237,500 of licensing fees due to MSLO through the end of the agreement as of June 30, 2015.
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SHORT TERM DEBT, NET OF DEBT DISCOUNT (PG 10)
At June 30, 2015, approximately $3.2 million of notes are in default. Management is working with the creditors to modify the terms of these defaulted notes.
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SUBSEQUENT EVENTS (PG 13)
The Company was not able to issue the full Series G Preferred dividend due to the amount of shares authorized. Management is looking to amend the Certificate of Designation so that the balance of the dividend as of June 30, 2015 due in the amount of $332,208 can be issued. The dividend due has been accrued in obligations to be settled in stock as of June 30, 2015.
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