Quarterly report pursuant to Section 13 or 15(d)

Liquidity and Financial Condition

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Liquidity and Financial Condition
6 Months Ended
Sep. 30, 2011
Liquidity and Financial Condition [Abstract]  
Liquidity and Financial Condition [Text Block]
Note 2. Liquidity and Financial Condition
 
The Company incurred a net loss of $3,014,000 for six months ended September 30, 2011. At September 30, 2011, the Company’s accumulated deficit amounted to $127,999,000. The Company had working capital of $2,715,000 as of September 30, 2011. The Company may raise additional capital from external sources in order to continue the longer term efforts contemplated under its business plan. The Company expects to continue incurring losses for the foreseeable future and may raise additional capital to pursue its product development initiatives, penetrate markets for the sale of its products and continue as a going concern.
 
On June 29, 2011, the Company entered into a Loan and Security Agreement and a Supplement to the Loan and Security Agreement with Venture Lending & Leasing VI, Inc. to borrow up to an aggregate of up to $2,500,000 (collectively, the “VLL6 Agreements”).  The VLL6 Agreements provide for a first tranche of $1,500,000 and, upon meeting certain financial milestones, the Company may borrow a second tranche of $1,000,000.  On June 29, 2011, the Company borrowed $1,500,000 on the first tranche (Note 3). On September 30, 2011, the Company met the financial milestones and expects to borrow the second tranche of $1,000,000 prior to November 30, 2011.
 
The Company currently anticipates that its cash and cash equivalents and the anticipated borrowing of the second tranche of $1,000,000 under the VLL6 Agreements will be sufficient to meet its working capital requirements to continue its sales and marketing and research and development through at least October 1, 2012. However, in order to execute the Company’s long-term Microcyn product development strategy and to penetrate new and existing markets, the Company may need to raise additional funds, through public or private equity offerings, debt financings, corporate collaborations or other means. The Company may raise additional capital to pursue its product development initiatives and penetrate markets for the sale of its products.

 
Management believes that the Company has access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, the Company has not secured any commitment for new financing at this time, nor can it provide any assurance that new financing will be available on commercially acceptable terms, if needed. If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures to reduce costs in order to conserve its cash.