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Note 2. Liquidity and Financial Condition
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9 Months Ended |
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Dec. 31, 2011
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| Liquidity Disclosure [Policy Text Block] |
Note
2. Liquidity and Financial Condition
The
Company incurred a net loss of $5,561,000 for the nine months
ended December 31, 2011. At December 31, 2011, the
Company’s accumulated deficit amounted to $130,546,000.
The Company had working capital of $3,784,000 as of December
31, 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 to continue as a going concern.
On
December 22, 2011, the Company entered into agreements with
institutional and accredited investors to issue 1,809,653
shares of its common stock at $1.15 per share, with no
warrant coverage, yielding gross proceeds of $2,081,000 and
net proceeds of $1,894,000 after deducting placement agent
commissions of $145,000 and other offering costs of $42,000.
The offering closed on December 28, 2011 (Note 6).
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
provided for a first tranche of $1,500,000 and, upon meeting
certain financial milestones, the Company was permitted to
borrow a second tranche of $1,000,000. On June 29, 2011,
the Company borrowed $1,500,000 on the first tranche. On
September 30, 2011, the Company met the financial milestones
and became eligible to draw the second tranche of the loan.
On November 10, 2011, the Company borrowed the second tranche
of $1,000,000 (Note 3).
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 through at least January 1, 2013. 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.
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