GOING CONCERN
Since our inception, we have sustained operating losses. During the twelve months ended June 30, 2019, we incurred a net loss of $4,598,343 and had a total stockholders’ deficit of $2,472,605.
The Company has limited available cash resources and we do not believe our cash on hand will be adequate to satisfy our ongoing working capital needs. The Company is continuing to raise capital through private placement of our common stock, debt, and the use of convertible debt to finance the Company’s operations, of which it can give no assurance of success. However, we believe that our current capitalization structure, combined with the continued expansion of operations, will enable us to achieve successful financings to continue our growth.
Even if the Company is successful in raising additional funds, the Company cannot give any assurance that it will, in the future, be able to achieve a level of profitability from the sale of its products to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on recoverability and reclassification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
During the twelve months ended June 30, 2019, net cash used in operating activities totaled $1,567,227 compared to $1,757,638 for the twelve months ended June 30, 2018
During the twelve months ended June 30, 2019 and 2018 respectively, there was not any net cash provided from investing activities.
During the twelve months ended June 30, 2019, net cash aggregating $1,548,928 was provided by financing activities, which represents net proceeds of $50,000 from private sales of our common stock including issuance of warrants, $1,602,005 from the issuance of convertible debt ($102,077 of which was used to repay older debt), and required principal payments of $1,000 of our bank loan. During the twelve months ended June 30, 2018, net cash aggregating $1,791,752 was provided by financing activities, which represents net proceeds of $60,000 from private sales of our common stock including issuance of warrants, $2,316,093 from the issuance of convertible debt ($581,250 of which was used to repay older debt), and required principal payments of $2,096 of our bank loan.
From our inception in January 2010 through June 30, 2019, we have generated an accumulated deficit of approximately $13,219,059. Assuming we raise additional funds and continue operations, it is possible we could incur additional operating losses during the course of fiscal 2020 and possibly thereafter. We plan to continue to pay or satisfy existing obligation and commitments and finance our operations, as we have in the past, primarily through the sale of our securities and other forms of external financing until such time that we are able to generate sufficient funds from the sale of our products to finance our operations, of which we can give no assurance.
Funds on hand are not sufficient to fund our operations and we intend to rely on debt and the sale of stock in private placements to increase liquidity and, we anticipate deriving additional revenue from product sales in fiscal 2020, but we cannot at this time quantify the amount. If we are unable to raise cash through the sale of our stock, we may be required to severely restrict our operations.
As of February 8, 2017, we entered into two agreements with Black Forest, an Equity Purchase Agreement (the “EPA”) and a Registration Rights Agreement (the “RRA”). The two agreements were filed as exhibits to the Registrant’s Current Report on Form 8-K dated February 8, 2017, and this Registration Statement is being filed in order for us to fulfill our obligations under the RRA. The following summary is qualified in its entirety by reference to such exhibits to our Form 8-K. On August 24, 2017, the Company issued its first and, to date, only “put notice” to Black Forest and delivered to Black Forest 264,085 shares of common stock in exchange for $30,000.