|3 Months Ended|
Nov. 30, 2018
|Notes to Financial Statements|
|Note 3: Going Concern||
As of November 30, 2018, the Company had cash of $0.2 million and a working capital deficiency of $12.9 million. During the quarter year ended November 30, 2018, the Company used approximately $1.6 million of cash in its operation. The Company has incurred recurring losses resulted in an accumulated deficit of $28 million as of November 30, 2018. These conditions raise substantial doubt as to our ability to continue as going concern within one year from issuance date of the financial statements.
The ability of the Company to continue as a going concern is dependent upon generating profitable operations in the future and obtaining additional funds by way of public or private offering to meet the Company’s obligations and repay its liabilities when they become due.
Historically, the Company’s principal source of financing has come through the sale of its common stock and issuance of convertible notes. The Company successfully completed an Initial Public Offering (IPO) on NASDAQ on June 29, 2017, raising a total of $12 million ($10.9 million net of costs). In June 2018, the Company completed a private placement of 8% senior secured convertible notes to institutional investors raising $9 million of gross proceeds ($8.4 million net of costs).
Exclusive of the development costs, the Company is currently using $1.2 million each quarter from its operations or approximately $0.4 million per month. The Company continues to experience significant growth in the number of worksite employees, which would generate additional administrative fees that would offset the current level of operating cash burn. Since November 30, 2018, the Company has added, through executed service agreements, approximately 25 clients, servicing approximately 3,300 worksite employees with approximately $85.9 million in additional gross billings per year.
The remaining key features (scheduling and intermediation) of the Company’s mobile application will be fully released in the first calendar quarter of 2019. The onboarding feature has already been released, but the scheduling and intermediation features have been postponed pending additional financing which is expected to come during the first calendar of 2019. The Company also developed an additional driver management layer to its mobile platform and plans to begin using this “delivery feature” of its mobile platform during the first calendar quarter of 2019.
The deployment of these features, expected in the first calendar quarter of 2019, would further accelerate the growth as the Company’s clients would be able to remediate their turnover and associated costs and self-deliver a brand intended experience and retain profit currently given away to third party delivery platforms. The Company’s plans and expectations for the next 12 months include raising capital to help fund expansion of its operations, including the final development of its mobile application users features. The Company engaged an investment banking firm to assist the Company in (i) preparing information materials, (ii) advising the Company concerning the structure, price and conditions, and (iii) organizing the marketing efforts with potential investors in connection with a financing transaction.
The Company’s management believes that the Company’s current cash position, along with its revenue growth and the financing from potential institutional investors will be sufficient to fund its operations for at least a year from the date these financials are available. If these sources do not provide the capital necessary to fund the Company’s operations during the next twelve months from the date of this report, the Company may need to curtail certain aspects of its operations or expansion activities, consider the sale of its assets, or consider other means of financing. The Company can give no assurance that it will be successful in implementing its business plan and obtaining financing on terms advantageous to the Company or that any such additional financing would be available to the Company. These condensed consolidated financial statements do not include any adjustments from this uncertainty.
The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef