2. GOING CONCERN AND MANAGEMENT’S PLANS

As of December 31, 2014, the Company had a cash balance, a working capital deficiency and an accumulated deficit of $1,627,062, $17,576,829 and $64,738,131, respectively. During the years ended December 31, 2014 and 2013, the Company incurred net losses of $23,229,319 and $24,137,285, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

On December 23, 2014, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain investors (the “Purchasers”) for an aggregate of $6,000,000 (the “Aggregate Subscription Amount”), of which $2,000,000 had been received by the Company as of December 31, 2014. See Note 17 – Stockholders’ Deficiency for additional details. In December 2014, the Company implemented cost reduction measures to help reduce employee headcount and other operating expenditures.

Since inception, the Company’s operations have primarily been funded through proceeds from equity and debt financings. Although management believes that the Company has access to capital resources, there are currently no commitments in place for new financing at this time, and there is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. The Company intends to continue to raise additional capital through debt and equity financings. There is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern.

Subsequent to December 31, 2014, $3,000,000 was released from escrow associated with the Securities Purchase Agreement and the Company raised an aggregate of $1,930,000 through equity financing. The Company is currently funding its operations on a month-to-month basis. While there can be no assurance that it will be successful, the Company is in active negotiations to raise additional capital. See Note 17 – Subsequent Events for additional details.