The following discussion of our financial condition should be read in conjunction with the financial statements and notes to financial statements included elsewhere in this filing. The following discussion (as well as statements in Item 1 above and elsewhere) contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 that involve risks and uncertainties. Some or all of the results anticipated by these forward-looking statements may not occur. Forward-looking statements involve known and unknown risks and uncertainties including, but not limited to, trends in the biotechnology, healthcare, and pharmaceutical sectors of the economy; competitive pressures and technological developments from domestic and foreign genetic research and development organizations which may affect the nature and potential viability of our business strategy; and private or public sector demand for products and services similar to what we plan to commercialize. We disclaim any intention or obligation to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Unless otherwise indicated or the context otherwise requires, all references in
this report to "we", "our", "us", the "Company" or similar terms refer to
Overview
We have developed and intend to commercialize our patented miniform pads ("PAD") and PAD based over-the-counter products for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We are also developing and intend to commercialize genomic diagnostics for the laboratory market, based on our lateral flow patents. Our platforms include: inSync®, UniqueTM, and OEM branded over-the-counter and laboratory testing products based on our core intellectual property related to our PAD technology.
The continuation of our operations remains contingent upon the receipt of additional financing required to execute our business and operating plan, which is currently focused on the commercialization of our PAD technology, either directly or through a joint venture or other relationship intended to increase shareholder value. In the interim, we have nominal operations, focused principally on maintaining our intellectual property portfolio and maintaining compliance with the public company reporting requirements. In order to continue as a going concern, we will need to raise capital, which may include through the issuance of debt and/or equity securities. No assurances can be given that we will be able to obtain additional financing under terms favorable to us, if at all, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize our PAD technology.
Our principal business line consists of our OTC Business (as defined in Note 1 of Item 1, Part 1 hereof), which includes commercialization of our InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms, as well as maintaining established and continuing licensing relationships related to the OTC Business. We also own certain diagnostic testing technology that is based on our lateral flow patents. Management believes this corporate structure permits us to more efficiently explore options to maximize the value of the Businesses (as defined in Note 1 of Item 1, Part 1 hereof), with the objective of maximizing the value of the Businesses for the benefit of the Company and our shareholders.
Our current focus is to obtain additional working capital necessary to continue as a going concern, and to develop a longer term financing and operating plan to: (i) commercialize our over-the-counter products either directly or through joint ventures, mergers or similar transactions intended to capitalize on potential commercial opportunities; (ii) contract manufacturing of our over-the-counter products to third parties while maintaining control over the manufacturing process; (iii) maintain our intellectual property portfolio with respect to patents and licenses pertaining to both the OTC Business and the Diagnostics Business (as defined in Note 1 of Item 1, Part 1 hereof); and (iv) maximize the value of our investments in non-core assets. As a result of our current financial condition, however, our efforts in the short-term will be focused on obtaining financing necessary to maintain the Company as a going concern.
While we expect the impacts of COVID-19 to have an adverse effect on our ability to successfully obtain working capital necessary to continue as a going concern and to develop a longer term financing and operating plan, we are unable to predict the extent or nature of these impacts at this time.
The following discussion of our financial condition should be read together with
our financial statements and related notes included in the Annual Report on Form
10-K, filed on
- 12 - Table of Contents Results of Operations
Comparison of the Three and Nine Months Ended
The Company did not generate any revenue during the three and nine months ended
Sales, general and administrative expense for the three months ended
Professional fees for the three months ended
Professional fees, related party for the three months ended
The Company did not incur any research and development costs during the three or
nine months ended
Interest expense for the three months ended
During the nine months ended
During the three months ended
The Company expects net loss to decrease in future periods due to the current suspension of its active operations and its lack of revenue. The Company does not expect to re-commence active operations until it is able to secure financing necessary to execute its business and operating plan, including the development and launch of its over-the-counter products, or to otherwise capitalize on our PAD technology.
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Liquidity and Capital Resources
At
The Company had cash and cash equivalents of
During the nine months ended
The Company has not generated sufficient revenue from operations to meet its
operating expense. The Company requires additional funding to complete the
development and launch of its over-the-counter products, or to otherwise
capitalize on its PAD technology. The Company has historically financed its
operations primarily through issuances of equity and the proceeds of debt
instruments. In the past, the Company has also provided for its cash needs by
issuing shares of its Common Stock, options and warrants for certain operating
costs, including consulting and professional fees. In addition, in the fiscal
year ended
Management believes that given the current economic environment and the continuing need to strengthen our cash position, there is substantial doubt about our ability to continue as a going concern. We are pursuing various funding options, including licensing opportunities and the sale of investment holdings, as well other financing transactions, to obtain additional funding to continue the development of our products and bring them to commercial markets. There can be no assurance that we will be successful in our efforts. Should we be unable to raise adequate financing or generate sufficient revenue in the future, the Company's business, results of operations, liquidity and financial condition would be materially and adversely harmed.
The Company believes that the ability of the Company to re-commence operations, and therefore continue as a going concern is dependent upon its ability to do any or all of the following:
?
obtain adequate sources of funding to pay operating expense and fund long-term business operations;
?
enter into a licensing or other relationship that allows the Company to commercialize its products;
?
manage or control working capital requirements by reducing operating expense; and
?
develop new, and enhance existing, relationships with product distributors and other points of distribution for the Company's products.
There can be no assurance that the Company will be successful in achieving its short- or long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern.
Off-Balance Sheet Arrangements
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
- 14 - Table of Contents Critical Accounting Policies
The listing below is not intended to be a comprehensive list of all of our
accounting policies. In most cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in
Impairment of Assets
We assess the impairment of long-lived assets, including our other intangible assets, at least annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in our strategic plan and/or market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. We hold investments in companies having operations or technologies in areas which are within or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. We record an investment impairment charge if we believe an investment has experienced a decline in value that is other than temporary. Future changes in our strategic direction, adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment's current carrying value, thereby possibly requiring an impairment charge in the future.
In determining fair value of assets, the Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets that are not readily apparent from other sources. Actual fair value may differ from management estimates resulting in potential impairments causing material changes to certain assets and results of operations.
Global
Preprogen: During the years ended
Deferred Taxes
We recognize deferred tax assets and liabilities based on differences between
the financial statement carrying amounts and tax bases of assets and
liabilities, which requires management to perform estimates of future
transactions and their respective valuations. We review our deferred tax assets
for recoverability and establish a valuation allowance if it is more likely than
not that the Company will not realize the benefit of the net deferred tax asset.
At
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