Note 2. Liquidity, Going Concern and Management Plans

The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. For the fiscal years ended April 30, 2016 and 2015, the Company incurred losses in the amounts of approximately $1,221,000 and $3,829,000, respectively.

The Company raised approximately $600,000 from financing activities in the fiscal year 2016. (See note 3) The Company also exchanged notes payable and accrued interest payable of approximately $672,000 for equity in fiscal 2016. (See note 4) While the Company has made significant operational changes in the last year which has reduced its cash burn, there still remains substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

If current and projected revenue growth does not meet estimates, the Company may need to raise additional capital through debt and/or equity transactions and reduce certain overhead costs. The Company cannot provide assurance that financing will close or be available to it on favorable terms.