Note 2 – Liquidity and Management Plans

 

The Company has not generated revenues since its inception and had net income (loss) of $278,621 and ($2,015,122) for the three months ended June 30, 2014 and 2013, respectively, and net losses of $30,731,102 and $2,069,446 for the six months ended June 30, 2014 and 2013, respectively. The net income of $278,621 was principally on account of non-cash other income items, including $1,725,823 for the change on the fair value of derivative liabilities and $2,084,368 for a gain on the extinguishment of the convertible notes, net of discount, accrued interest and related derivatives.

 

As of June 30, 2014, the Company had cash on hand of $22,945,443. In April 2014, the Company completed its IPO of 4,600,000 shares of common stock through which the Company raised net proceeds of approximately $24.8 million. In connection with the completion of the IPO, the Company’s outstanding convertible notes and interest were converted into 1,833,336 and 96,792 shares, respectively, of common stock, thus extinguishing the debt associated with the notes. On April 4, 2014, the Company issued 210,527 shares of common stock to a strategic investor upon the receipt of net proceeds of $900,000 ($300,000 received on March 27, 2014, $700,000 received on April 4, 2014 less $100,000 to MDB Capital Group as a commission ). The company expects that cash on hand after the IPO will be sufficient to fund its operations through 2015.

 

Research and development of new technologies is, by its nature, unpredictable. Although the Company will undertake development efforts with commercially reasonable diligence, there can be no assurance that the net proceeds from the Company’s recently completed IPO and strategic investor financing will be sufficient to enable it to develop its technology to the extent needed to create future revenues to sustain its operations. The Company expects that it may choose to pursue additional financing, depending upon the market conditions, which could include follow-on equity offerings, debt financing, co-development agreements or other alternatives. Should the Company choose to pursue additional financing, there is no assurance that the Company would be able to do so on terms that it would find acceptable.