to raise enough capital or generate revenues to sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
Management believes that the Company's capital requirements will depend on many factors. These factors include the final phase of development and mass production being successful as well as product implementation and distribution.
The consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.
Example 2.15: Going Concern—Substantial Doubt Remains—Contingent on Obtaining Financing
The accompanying financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and has never paid dividends and is unlikely to pay dividends or generate earnings in the near future. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity or debt financing to continue operations, the successful development of one or more alternative oil and gas properties, and the attainment of profitable operations. As of February 28, 20X4, the Company has not generated any revenues and has an accumulated loss of $1,889,899 since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
On May 15, 20X2, the Company modified an October 20X1 capital raising agreement with Emerald Capital Partners, LLP (“Emerald”), a corporate finance firm based in Dallas and regulated by the SEC. While the Company no longer pays a monthly fee to Emerald, it is obligated for a period of 18 months beginning May 1, 20X2 to pay Emerald a success fee for any transaction completed with any prospect previously introduced by Opal. Subsequent to the agreement modification, Emerald has introduced the Company to a very small number of further potential investors or joint venture partners. If the Company consummates a transaction with any of these, it generally expects to pay to this firm the stock success fee represented by 4,289,052 shares of the Company's common stock, which is subject to forfeiture, as originally agreed upon.
Example 2.16: Going Concern—Substantial Doubt—Management's Plans
The Company's consolidated financial statements have been prepared using accounting principles generally accepted in the United States. applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
At February 28, 20X1, the Company had an accumulated deficit of $4,891,093. Subsequent to February 28, 20X1 the Company has not received any cash proceeds from its stock subscriptions receivable, but the Company entered into stock purchase agreements and issued 1,283,500 restricted common shares at $0.26 per share, for total cash proceeds of $320,875. The Company anticipates that expected future proceeds from its stock subscriptions receivable, additional financing through the sale of its common stock or other equity‐based securities, and additional sales of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 20X2. In the event that the Company is unable to obtain additional capital in the future, it would be forced to further reduce operating expenses and/or cease operations altogether.
3 ASC 210 BALANCE SHEET
1 Authoritative Literature Subtopics Scope and Scope Exceptions ASC 210‐10 ASC 210‐20
3 Disclosure and Presentation Requirements ASC 210‐10, Overall Assets Liabilities Stockholders' Equity Form of the Statement of Financial Position ASC 210‐20, Offsetting Presentation Disclosures
4 Presentation and Disclosure Examples Example 3.1: Statement of Financial Position—Highly Aggregated Example 3.2: Statement of Financial Position—Highly Detailed Example 3.3: Disclosure by Type of Financial Instrument Example 3.4: Disclosure by Type of Financial Instrument and Type of Counterparty Example 3.5: Sophisticated Entity Disclosure by Type of Financial Instrument and Type of Counterparty Example 3.6: Netting of Certain Balance Sheet Accounts
AUTHORITATIVE LITERATURE
Statements of financial positions (also commonly known as balance sheets or statements of financial condition) present information about assets, liabilities, and owners' equity and their relationships to each other. They reflect an entity's resources (assets) and its financing structure (liabilities and equity) in conformity with generally accepted accounting principles (GAAP). The statement of financial position reports the aggregate effect of transactions at a point in time, whereas the statements of income, retained earnings, comprehensive income, and cash flows all report the effect of transactions occurring during a specified period of time such as a month, quarter, or year.
It is common for the statement of financial position to be divided into classifications based on the length of the entity's operating cycle. Assets are classified as current if they are reasonably expected to be converted into cash, sold, or consumed either within one year or within one operating cycle, whichever is longer. Liabilities are classified as current if they are expected to be liquidated through the use of current assets or incurring other current liabilities. The excess or deficiency of current assets over or under current liabilities, which is referred to as networking capital, identifies, if positive, the relatively liquid portion
