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Microcap & Penny Stocks : HITSGALORE.COM (HITT) -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (4757)	12/2/1999 2:22:00 PM
From: Q.	Read Replies (2) \| Respond to of 7056

NOTE 3 GOING CONCERN The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and liquidation of liabilities in the ordinary course of business. The Company and its subsidiaries have incurred losses from continuing operations of $772,428, $3,038,574 and $18,048,489 in 1998, 1997 and 1996, respectively, and have used approximately $314,507, $1,361,719 and $4,193,949, respectively, of cash in their operations. The Company and its subsidiaries have a net working capital deficiency of approximately $4.2 million and a deficiency in assets of approximately $4.8 million as of December 31, 1998 and were in default of certain obligations to their creditors. Additionally, as discussed in Note 14, the Company and its subsidiaries are subject to various legal and administrative proceedings. An unfavorable outcome in one or more of these actions or proceedings could have an adverse effect on the Company's liquidity and ability to maintain current business operations. The intent of the Merger and Reorganization Agreement between the Company and Old Hitsgalore.com, a development stage company, and the transactions contemplated thereby is to provide the Company with the ability to liquidate the debts, liabilities and obligations assumed by IHSI and provide working capital to the Company. However, there is no assurance that the transactions contemplated by the Merger and Reorganization Agreement will provide the cash required by the Company to sustain future operations, in which case, the company would be required to seek additional financing sources. In the absence of a sufficient amount of cash flows from operations or from future financing transactions, the Company would be required to seek other alternatives. Based on the foregoing factors, it is uncertain whether or not the Company will be able generate adequate cash flows from operations, or from financing transactions, to carry on or maintain business operations. If the Company is unable to generate adequate cash flows from operations or from financing transactions to support its business operations, the Company would be required to seek other alternatives, including sale, merger or discontinuance of operations. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.