Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
For the year ended February 28, 2019, the Company had negative cash flow from operating activities of $1,804,261. As of February 28, 2019, the Company has an accumulated deficit of $20,142,492 and negative working capital of $15,376,920. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.
The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.
Management has plans to address the Company’s financial situation as follows:
In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raises doubts about the Company’s ability to continue as a going concern.
As February 28, 2019 and February 28, 2018, current liabilities included approximately $6.2 million and $31.1 million, respectively, of derivative liabilities that are expected to be settled in shares of the Company in accordance with the various conversion terms.
As of February 28, 2019 and February 28, 2018, we had a cash balance of $21,192 and $24,773, respectively............
Reverse split most likely be implemented once company becomes current on financials whereas there is a stop sign currently on OTC board..
Once R/S is completed dilution will continue from convertible notes both current and defaulted, salaries, overhead and much more especially the Derivative Liabilities..
Yet there is more as %9 of revenues are going to an investor in perpetual...
11. DEFERRED VARIABLE PAYMENT OBLIGATION
On February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 (including $192,500 paid in January and February 2019) in exchange for a perpetual 9% rate on the Company’s reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues). These variable payments (Payments) are to be made 30 days after the fiscal quarter. If the Payments would deplete RAD’s available cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount. The investor has agreed to pay the remaining $707,500 over the remaining nine-month period in minimum $60,000 monthly installments, commencing March 1, 2019 and Concluding November 30, 2019. The investor has advanced an additional $147,000 pursuant to this agreement between March 1 through to May 31, 2019. If the total investor advances turns out to be less than $900,000, this would not constitute a breach of the agreement, rather the 9% rate would be adjusted on a pro-rata basis.
F-15
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
(FORMERLY ON THE MOVE SYSTEMS CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the event that at least 10% of the assets of the Company are sold by the Company, the investor would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investor. The FMV cannot exceed 20% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investor must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 20% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.
The Payments will first become payable on June 30, 2019 based on the quarterly Revenues for the quarter ended May 31, 2019.
In the event that the variable payment obligation has been repaid the Company will expense any further payments as a financing expense.
As the Company’s long-term future revenues were difficult to accurately forecast, the value of the deferred variable payment obligation was determined to be equivalent to the value of the consideration the Company has received.
At February 28, 2019 the value of the deferred payment obligation was $192,500 (2018-$0),including a current portion of $2,108.
Trainwreck...all in SEC filings...
Aitx definately not the way to go............
