Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation and Going Concern

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Basis of Presentation and Going Concern
9 Months Ended
Dec. 31, 2012
Notes to Financial Statements  
NOTE 2 - Basis of Presentation and Going Concern

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not contain all of the information and footnotes required for complete consolidated financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial information. The accompanying Condensed Consolidated Balance Sheet at March 31, 2012 has been derived from the Company's audited consolidated financial statements at that date but do not include all disclosures required by U.S. GAAP. Additionally, certain reclassifications have been made to the Condensed Consolidated Balance Sheet at March 31, 2012 to conform to current year presentation. The operating results for the nine months ended December 31, 2012 are not necessarily indicative of the operating results to be expected for the Company's fiscal year ending March 31, 2013 or for any other interim period or any other future period.

 

The accompanying unaudited Condensed Consolidated Financial Statements and notes to Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements for the fiscal year ended March 31, 2012 contained in its Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission (“SEC”).

 

The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. As a development stage company without sustainable revenues, the Company has experienced recurring losses and negative cash flows from operations. From inception through December 31, 2012, the Company has accumulated a deficit of $63.9 million during its development stage. The Company expects these conditions to continue for the foreseeable future as it expands its Human Clinical Trials in a Test Tube™ platform and executes its drug rescue, predictive toxicology and cell therapy business programs. 

 

At December 31, 2012, the Company had $24,200 in cash and cash equivalents. The Company’s principal source of financing during the quarter ended December 31, 2012 was proceeds from certain financing transactions between the Company and Platinum. On July 2, 2012 and on August 31, 2012, the Company issued to Platinum 10% senior secured convertible promissory notes in the principal amount of $500,000 (the “July 2012 Platinum Note”) and $750,000 (the “August 2012 Platinum Note”), respectively, (see Note 7, Convertible Promissory Notes and Other Notes Payable). On October 11, 2012, the Company and Platinum entered into the October 2012 Agreement, wherein Platinum agreed to purchase additional 10% senior secured convertible promissory notes in the aggregate principal amount of $2.0 million, issuable over four $500,000 tranches between October 2012 and December 2012. The first and second $500,000 tranches, in the aggregate principal amount of $1.0 million, were purchased by Platinum on October 11, 2012 and October 19, 2012, respectively. The final two $500,000 tranches, were combined into a single senior secured promissory note in the aggregate principal amount of $1.0 million (the “$1.0 Million Note”), pursuant to amendments to the October 2012 Agreement entered into by the Company and Platinum on November 14, 2012 and January 31, 2013 (the “NEPA Amendments”). Under the terms of the NEPA Amendments, Platinum agreed to purchase the $1.0 Million Note within five (5) business days of the Company's notice to Platinum of the consummation of a debt or equity financing, or combination of financings, prior to February 15, 2013, resulting in gross proceeds to the Company of at least $1.0 million, (see Note 7, Convertible Promissory Notes and Other Notes Payable, and Note 12, Subsequent Events.)

 

Through December 31, 2012, the Company issued 951,256 Units in private placements to accredited investors and received cash proceeds of $475,600. The Units were sold for $0.50 per Unit and each Unit consisted of one share of the Company’s common stock and a five year warrant to purchase one half (1/2) of one share of the Company’s common stock at an exercise price of $1.50 per share. At December 31, 2012, the proceeds of these private placements have reduced the remaining amount of financing the Company is required to secure from $1.0 million to $524,400 to be entitled to sell the $1.0 Million Note to Platinum as described above. (See Note 12, Subsequent Events.)

 

The Company anticipates that its cash expenditures during the next twelve months will be approximately $4.0 million to $6.0 million and it plans to meet its cash needs and fund its working capital requirements through a combination of additional private placements of its securities, which may include both debt and equity securities issued to Platinum and other investors, stem cell technology-based research and development collaborations, stem cell technology and drug candidate license fees and government grant awards. If the Company is unable to obtain sufficient financing, it may be required to reduce, defer, or discontinue certain of its research and development activities or it may not be able to continue as a going concern.