The Company reported a net loss of $3,722,000 for the nine months ended December 31, 2013. At December 31, 2013 and March 31, 2013, the Company’s accumulated deficit amounted to $141,467,000 and $137,745,000, respectively. The Company had working capital of $2,573,000 and $6,407,000 as of December 31, 2013 and March 31, 2013, respectively. The Company expects the need to 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 need to raise additional capital to pursue its product development initiatives, penetrate markets for the sale of its products and continue as a going concern. If the closing of the intended initial public offering by the Company’s subsidiary, Ruthigen, Inc. occurs, the Company will be repaid for certain costs incurred and advanced related to Ruthigen’s intended initial public offering and certain other agreed-upon expenses, pursuant to the terms of the funding agreement the Company entered into with Ruthigen (See Note 4). At December 31, 2013, these costs amounted to $1,347,000, and $1,160,000 is reported as deferred offering costs in the accompanying condensed consolidated balance sheet and $187,000 is reported as selling, general and administrative expense.

On December 4, 2013, the Company entered into agreements with institutional and accredited investors to issue 550,000 shares of its common stock at $4.00 per share, with no warrant coverage, yielding gross proceeds of $2,200,000 and net proceeds of $2,002,000 after deducting placement agent commissions and other offering costs. The Company retained Dawson James Securities, Inc. as the exclusive placement agent for this offering, and paid them $154,000 in placement agent commissions. In addition to the payment of certain cash fees upon closing of the offering, the Company issued a warrant to Dawson James Securities, Inc. to purchase up to 16,500 shares of common stock. The warrants are exercisable at $5.00 per share and will expire on May 3, 2016.

The Company currently anticipates that its cash and cash equivalents will be sufficient to meet its working capital requirements to continue its sales and marketing and research and development efforts through at least January 1, 2015. 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 and potentially reduce operating expenditures.

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 the Ruthigen initial public offering will be completed or that other new financings 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.