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
3 Months Ended
Jun. 30, 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 in the Condensed Consolidated Balance Sheet at March 31, 2012 to conform to current year presentation. The operating results for the three months ended June 30, 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 year.

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.

 

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 June 30, 2012, the Company has a deficit accumulated during its development stage of $56.6 million. 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 and cell therapy business programs.

 

At June 30, 2012, the Company had $31,700 in cash and cash equivalents. On July 2, 2012, Platinum Long Term Growth Fund VII, LLC (“Platinum”), the Company's largest institutional investor, purchased from the Company a secured 10% convertible promissory note in the principal amount of $500,000 (the “July 2012 Platinum Note”).  (See Note 11, Subsequent Events.) In the event the Company consummates an equity or equity-based financing, or series of financing transactions resulting in gross proceeds to the Company of at least $3.0 million (“Qualified Financing”), the principal and accrued interest due under the terms of the July 2012 Platinum Note shall automatically convert into such securities as are issued in connection with the Qualified Financing. In connection with the Company's June 29, 2012 Exchange Agreement with Platinum (see Note 9, Capital Stock), Platinum has also agreed to invest at least $500,000 in the Qualified Financing, provided that the Company secures binding commitments from other investors in the Qualified Financing aggregating at least $3.0 million prior to September 29, 2012. The Company does not believe that its cash and cash equivalents at June 30, 2012, together with the proceeds of the July 2012 Platinum Note will enable it to fund its operations through the next twelve months. The Company anticipates that its cash expenditures during the next twelve months will be approximately $4 million to $6 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, 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.