NOTE 2 – LIQUIDITY MATTERS

The accompanying consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern. The Company has evaluated its expected cash requirements over the next twelve months, which include, but are not limited to, investments in additional sales and marketing and product development resources, capital expenditures, and working capital requirements. The Company has engaged in strategies to diversify and grow its revenue. We anticipate that we will require additional financing during 2013 in order to meet these requirements and support our business growth.

As part of the Company’s financing plan established last year, we engaged a financial advisor to assist in securing additional equity capital of $3.0 million earlier this year. While this effort has not yet produced funding, the Company has both engaged another financial advisor and is pursuing other investment structures that are expected to provide cash funding to the Company. The Company projects that additional working capital, in addition to continued availability under existing credit facilities, is needed by June 30, 2013 to support current operations and plans.   

During the nine months ended March 31, 2013, the Company issued 2,535,093 shares of common stock and 507,019 warrants for total net proceeds approximating $980,000. In addition, during the nine months ended March 31, 2013, the Company issued 549,552 shares of common stock upon the exercise of stock options for total net proceeds approximating $22,000. (See Note 6)

As of March 31, 2013, the Company has borrowing availability totaling $765,000 under existing credit facilities. During the nine months ended March 31, 2013, we had borrowed approximately $765,000 under our existing credit facilities. (See Notes 4 and 11)

Although, management believes that the additional required funding will be obtained, there is no guarantee the Company will be able to obtain the additional required funds or that funds will be available on terms acceptable to the Company. If such funds are not available, management will be required to curtail its investments in additional sales and marketing and product development resources, and capital expenditures, which may have a material adverse effect on the Company’s future cash flows and results of operations, and its ability to continue operating as a going concern.