|
ADVANSOURCE BIOMATERIALS CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain statements that are
"forward-looking" within the meaning of the Private Securities Litigation Reform
Act of 1995 (the "Litigation Reform Act"). These forward looking statements and
other information are based on our beliefs as well as assumptions made by us
using information currently available.
The words "anticipate," "believe," "estimate," "expect," "intend," "will,"
"should" and similar expressions, as they relate to us, are intended to identify
forward-looking statements. Such statements reflect our current views with
respect to future events and are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected, intended or using other similar expressions.
In accordance with the provisions of the Litigation Reform Act, we are making
investors aware that such forward-looking statements, because they relate to
future events, are by their very nature subject to many important factors that
could cause actual results to differ materially from those contemplated by the
forward-looking statements contained in this Quarterly Report on Form 10-Q. For
example, we may encounter competitive, technological, financial and business
challenges making it more difficult than expected to continue to develop and
market our products; the market may not accept our existing and future products;
we may not be able to retain our customers; we may be unable to retain existing
key management personnel; and there may be other material adverse changes in our
operations or business. Certain important factors affecting the forward-looking
statements made herein also include, but are not limited to (i) continued
downward pricing pressures in our targeted markets, (ii) the continued
acquisition of our customers by certain of our competitors, and (iii) continued
periods of net losses, which could require us to find additional sources of
financing to fund operations, implement our financial and business strategies,
meet anticipated capital expenditures and fund research and development
costs. In addition, assumptions relating to budgeting, marketing, product
development and other management decisions are subjective in many respects and
thus susceptible to interpretations and periodic revisions based on actual
experience and business developments, the impact of which may cause us to alter
our marketing, capital expenditure or other budgets, which may in turn affect
our financial position and results of operations. For all of these reasons, the
reader is cautioned not to place undue reliance on forward-looking statements
contained herein, which speak only as of the date hereof. We assume no
responsibility to update any forward-looking statements as a result of new
information, future events, or otherwise except as required by law. For further
information you are encouraged to review our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for the fiscal
year ended March 31, 2011 and the risk factors discussed therein under Part I.
Item 1A.
Overview
We develop advanced polymer materials which provide critical characteristics in
the design and development of medical devices. Our biomaterials are used in
devices that are designed for treating a broad range of anatomical sites and
disease states. Our business model leverages our proprietary materials science
technology and manufacturing expertise in order to expand our product sales and
royalty and license fee income.
Our leading edge technology, notably products such as ChronoFlex®, HydroMed™,
and HydroThane™, has been developed to overcome a wide range of design and
functional challenges, from the need for dimensional stability, ease of
manufacturability and demanding physical properties to overcoming environmental
stress cracking and providing heightened lubricity for ease of insertion. Our
polymer product lines are compliant with measures applying to the processing of
certain animal waste to protect against transmissible spongiform
encephalopathies as set forth in European Council Decision 1999/534/EC. Our new
product extensions allow us to customize our proprietary polymers for specific
customer applications in a wide range of device categories.
-15-
--------------------------------------------------------------------------------History
We were founded in 1993 as a subsidiary of PolyMedica Corporation
("PolyMedica"). In June 1996, PolyMedica distributed all of the shares of
CardioTech International, Inc.'s ("CardioTech") common stock, par value $0.01
per share, which PolyMedica owned, to PolyMedica stockholders of record. Our
materials science technology is principally based upon the ChronoFlexTM
proprietary polymers which represent our core technology.
In July 1999, we acquired the assets of Tyndale-Plains-Hunter ("TPH"), a
manufacturer of specialty hydrophilic polyurethanes.
In July 1999, Dermaphylyx International, Inc. ("Dermaphylyx") was formed by
certain of our affiliates to develop advanced wound healing
products. Dermaphylyx was merged with and into us, effective March 2004, as a
wholly-owned subsidiary. In June 2006, our Board of Directors decided to cease
the operations of Dermaphylyx. We considered the net assets of Dermaphylyx to be
immaterial.
In April 2001, we acquired Catheter and Disposables Technology, Inc.
("CDT"). CDT, which was located in Minnesota, was an original equipment
manufacturer and supplier of private-label advanced disposable medical devices
from concept to finished packaged and sterilized products, providing engineering
services and contract manufacturing. In the development of our business model,
we reviewed the strategic fit of our various business operations and determined
that CDT did not fit our strategic direction. CDT was sold in March 2008.
In April 2003, we acquired Gish Biomedical, Inc. ("Gish"). Gish was located in
southern California and manufactured single use cardiopulmonary bypass products
having a disposable component. In the development of our business model, we
reviewed the strategic fit of our various business operations and determined
that Gish did not fit our strategic direction. Gish was sold in July 2007.
In March 2004, we joined with Implant Sciences Corporation ("Implant") to
participate in the funding of CorNova. CorNova was initially formed to develop a
novel coronary drug eluting stent using the combined capabilities and technology
of CorNova, Implant Sciences and CardioTech. We currently have an approximate
1.5% equity interest in the issued and outstanding common stock of CorNova,
based on the assumed conversion of all outstanding CorNova preferred stock into
common stock. Although CorNova is expected to incur future operating losses, we
have no obligation to fund CorNova.
At our 2007 Annual Meeting, our stockholders approved our reincorporation from
Massachusetts to Delaware. Our Articles of Charter Surrender in Massachusetts
and Certificate of Incorporation and Certificate of Conversion in Delaware were
effective as of October 26, 2007.
In June 2008, we reorganized our product line as part of our re-branding effort
and launched a new website at www.advbiomaterials.com. The information available
on or through our website is not a part of this report on Form 10-K. At our 2008
annual meeting of stockholders on October 15, 2008, our stockholders approved
the change of our name from CardioTech International, Inc. to AdvanSource
Biomaterials Corporation to better reflect our strategic plan. Our Certificate
of Amendment to our Certificate of Incorporation filed with the Secretary of
State of the State of Delaware effecting this name change was effective October
15, 2008.
Technology and Intellectual Property
Our unique materials science strengths are embodied in our family of proprietary
polymers. We manufacture and sell our custom polymers under the trade names
ChronoFilm, ChronoFlex, ChronoThane, ChronoPrene, ChronoSil, HydroThane, and
PolyBlend. The ChronoFlex family of polymers has the potential to be marketed
beyond our existing customer base. Our goal is to fulfill the market's need for
advanced materials science capabilities, thereby enabling customers to improve
devices that utilize polymers. Our chemists continue to develop the ChronoFlex
family of medical-grade polymers. Conventional polymers are susceptible to
degradation resulting in catastrophic failure of long-term implantable devices
such as pacemaker leads. ChronoFlex and ChronoThane polymers are designed to
overcome such degradation and reduce the incidents of infections associated with
invasive devices.
Key characteristics of our polymers are i) optional use as lubricious coatings
for smooth insertion of a device into the body, ii) antimicrobial properties
that are part of the polymer itself, and iii) mechanical properties, such as
hardness and elasticity sufficient to meet engineering requirements. We believe
our technology has wide application in increasing biocompatibility, drug
delivery, infection control and expanding the utility of complex devices in the
hospital and clinical environment.
-16-
--------------------------------------------------------------------------------We also manufacture and sell our proprietary HydroThane polymers to medical
device manufacturers that are evaluating HydroThane for use in their
products. HydroThane is a thermoplastic, water-absorbing, polyurethane elastomer
possessing properties which we believe make it well suited for the complex
requirements of a variety of catheters. In addition to its physical properties,
we believe HydroThane exhibits an inherent degree of bacterial resistance, clot
resistance and biocompatibility. When hydrated, HydroThane has elastic
properties similar to living tissue.
We also manufacture specialty hydrophilic polyurethanes that are primarily sold
to customers as part of exclusive arrangements. Specifically, one customer is
supplied tailored, patented hydrophilic polyurethanes in exchange for a
multi-year, royalty-bearing exclusive supply contract from which we generate
royalty income.
ChronoFilm is a registered trademark of PolyMedica. ChronoFlex is our registered
trademark. ChronoThane, ChronoPrene, ChronoSil, HydroThane, and PolyBlend are
our tradenames. CardioPass is our trademark.
We own or license four (4) patents relating to our vascular graft manufacturing
and polymer technology and products. While we believe our patents secure our
exclusivity with respect to certain of our technologies, there can be no
assurance that any patents issued would not afford us adequate protection
against competitors which sell similar inventions or devices, nor can there be
any assurance that our patents will not be infringed upon or designed around by
others. However, we intend to vigorously enforce all patents issued to us.
In October 2009, we filed for a U.S. patent on ChronoSil, our silicone-urethane
copolymer product, and methods for making ChronoSil. ChronoSil can have many
physical properties which are usually associated with polyurethanes, but also
the feel and characteristics of silicones.
In August 2010, the U.S. Patent and Trademark Office issued us a U.S. patent on
our proprietary antimicrobial formulation for ChronoFlex. Current technology in
the marketplace uses antibiotic drugs. The antimicrobial component of our
polymers have been designed to be non-leaching as a result of the polymerization
process.
In addition, PolyMedica has granted us an exclusive, perpetual, worldwide,
royalty-free license for the use of one polyurethane patent and related
technology in the field consisting of the development, manufacture and sale of
implantable medical devices and biodurable polymer material to third parties for
the use in medical applications (the "Implantable Device and Materials
Field"). PolyMedica also owns, jointly with Thermedics, Inc., an unrelated
company that manufactures medical grade polyurethane, the ChronoFlex
polyurethane patents relating to the ChronoFlex technology. PolyMedica has
granted us a non-exclusive, perpetual, worldwide, royalty-free sublicense of
these patents for use in the Implantable Devices and Materials Field.
Critical Accounting Policies
Our critical accounting policies are summarized in Note C to our consolidated
financial statements included in Item 8 of our Annual Report on Form 10-K for
the fiscal year ended March 31, 2011. However, certain of our accounting
policies require the application of significant judgment by our management, and
such judgments are reflected in the amounts reported in our financial
statements. In applying these policies, our management uses its judgment to
determine the appropriate assumptions to be used in the determination of
estimates. Those estimates are based on our historical experience, terms of
existing contracts, our observance of market trends, information provided by our
strategic partners and information available from other outside sources, as
appropriate. Actual results may differ significantly from the estimates
contained in our unaudited condensed consolidated financial statements. Other
than adopting the provisions of Accounting Standards Update ("ASU") 2009-13,
"Multi-Deliverable Revenue Arrangements," and ASU 2010-17, "Milestone Method of
Revenue Recognition," there has been no change to our critical accounting
policies during the nine months ended December 31, 2011.
-17-
--------------------------------------------------------------------------------Results of Operations
Three Months Ended December 31, 2011 vs. December 31, 2010
Revenues
Total revenues for the three months ended December 31, 2011 were $356,000 as
compared with $427,000 for the comparable prior year period, a decrease of
$71,000, or 16.6%.
Product sales of our biomaterials for the three months ended December 31, 2011
were $179,000 as compared with $264,000 for the comparable prior year period, a
decrease of $85,000, or 32.2%. During the three months ended December 31, 2010,
we realized an increase in demand for polymer products from two (2) of our major
customers. During the three months ended December 31, 2011, we did not realize
this same level of demand from these two (2) customers. Management anticipates a
return to increased levels of orders during fiscal 2012 and beyond from these
two customers, however, there can be no assurance that such increases in the
level of orders will occur. Certain new customers provided incremental sales
during the three months ended December 31, 2011 which has had the effect of
offsetting the decrease in sales from the two (2) customers previously discussed
above.
License, royalty and development fees for the three months ended December 31,
2011 were $177,000 as compared with $163,000 for the comparable prior year
period, an increase of $14,000 or 8.6%. We have agreements to license our
proprietary biomaterial technology to medical device manufacturers and develop
biomaterials for incorporation into medical devices under development by our
customers. Royalties are earned when these manufacturers sell medical devices
which use our biomaterials. The increase in license, royalty and development
fees during the three months ended December 31, 2011 is primarily a result of
the recognition of (i) minimum product purchase requirements during calendar
year 2011 by one customer pursuant to a supply agreement, and (ii) minimum
royalty requirements during calendar year 2011 by a second customer pursuant to
the minimum royalty provision of a supply agreement.
Gross Profit
Gross profit on total revenues for the three months ended December 31, 2011 was
$152,000, or 42.7% of total revenues, compared with $79,000, or 18.5% of total
revenues, for the comparable prior year period. The increase in gross profit
dollars and gross profit as a percentage of total revenues is primarily due to
the (i) increase in license fees and royalties, (ii) positive effect of the
restructuring of our manufacturing cost structure during the fourth quarter of
fiscal 2011 and first quarter of fiscal 2012, and (iii) efficiencies in our
manufacturing processes. The restructuring activities had the effect of lowering
our manufacturing overhead costs. The key strategic initiatives that led to the
improvements in our manufacturing overhead included the elimination of certain
production and quality control management positions considered as non-essential
and reduction of outside consultants.
Gross profit on product sales for the three months ended December 31, 2011 was a
loss of ($25,000), or (14.0%) of product sales, compared with a loss of
($84,000), or (31.8%) of product sales, for the comparable prior year
period. The improvement in gross profit dollars and gross profit as a percentage
of product sales is primarily due to the continued improvement in our
manufacturing cost structure and efficiencies in our manufacturing process
during the three months ended December 31, 2011. Management believes that future
growth in product sales should benefit our gross profit on product sales as a
result of the strategic initiatives employed to improve our manufacturing
overhead costs and processes.
Research, Development and Regulatory Expenses
Research and development expenses for the three months ended December 31, 2011
were $147,000 as compared with $215,000 for the comparable prior year period, a
decrease of $68,000 or 31.6%. Our research and development efforts are focused
on developing new applications for our biomaterials. Research and development
expenditures consisted primarily of the salaries of full time employees and
related expenses, and are expensed as incurred. The decrease in research and
development costs is primarily a result of decreased use of outside laboratory
testing services which was required to evaluate a specific raw material that is
expected to be used in connection with the manufacture of our finished polymer
products. We continue to maintain a relatively stable research and development
budget, which management believes meets the needs of our customers and internal
development needs.
-18-
--------------------------------------------------------------------------------Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended December
31, 2011 were $469,000 as compared with $667,000 for the comparable prior year
period, a decrease of $198,000 or 29.7%. The decrease is primarily due to lower
stock-based compensation charges, elimination of strategic consultants,
reduction in legal fees, elimination of non-essential trade shows and
advertising programs, and continued cost containment efforts.
Interest and Other Expenses
Interest and other expenses for the three months ended December 31, 2011 were
$187,000 as compared to $0 for the comparable prior year period. Interest
expense of $36,000 is primarily composed of interest incurred on the $800,000
promissory note issued in July 2011, and the amortization of related deferred
finance costs. Loss on extinguishment of promissory note of $151,000 is composed
of the write-off of remaining deferred finance costs and the prepayment
penalties incurred as a result of the early extinguishment of the promissory
note.
Nine Months Ended December 31, 2011 vs. December 31, 2010
Revenues
Total revenues for the nine months ended December 31, 2011 were $1,519,000 as
compared with $1,421,000 for the comparable prior year period, an increase of
$98,000, or 6.9%.
Product sales of our biomaterials for the nine months ended December 31, 2011
were $694,000 as compared with $1,027,000 for the comparable prior year period,
a decrease of $333,000, or 32.4%. During the nine months ended December 31,
2010, we realized an increase in demand for polymer products from two (2) of our
major customers. During the nine months ended December 31, 2011, we did not
realize this same level of demand from these two (2) customers. Management
anticipates a return to increased levels of orders during fiscal 2012 and beyond
from these two customers, however, there can be no assurance that such increases
in the level of orders will occur. Certain new customers provided incremental
sales during the nine months ended December 31, 2011 which has had the effect of
offsetting the decrease in sales from the two (2) customers previously discussed
above.
License, royalty and development fees for the nine months ended December 31,
2011 were $825,000 as compared with $394,000 for the comparable prior year
period, an increase of $431,000 or 109.4%. We have agreements to license our
proprietary biomaterial technology to medical device manufacturers and develop
biomaterials for incorporation into medical devices under development by our
customers. Royalties are earned when these manufacturers sell medical devices
which use our biomaterials. The increase in license, royalty and development
fees during the nine months ended December 31, 2011 is primarily a result of the
recognition of revenue on a non-exclusive license agreement and consulting
agreement (collectively, the "Agreements") entered into with a major
international developer and manufacturer of medical devices in June 2011. We
also recognized additional fee revenues resulting from (i) the excess of minimum
product purchase requirements over the actual amount of product purchased during
calendar year 2011 by one customer pursuant to a supply agreement, and (ii) the
excess of minimum royalties over the actual amount of royalties received during
calendar year 2011 by a second customer pursuant to the minimum royalty
provision of a supply agreement.
Gross Profit
Gross profit on total revenues for the nine months ended December 31, 2011 was
$941,000, or 62.0% of total revenues, compared with $351,000, or 24.7% of total
revenues, for the comparable prior year period. The increase in gross profit
dollars and gross profit as a percentage of total revenues is primarily due to
the (i) increase in licensing fees, (ii) positive effect of the restructuring of
our manufacturing cost structure during the fourth quarter of fiscal 2011 and
first quarter of fiscal 2012, and (iii) efficiencies in our manufacturing
processes. The restructuring activities had the effect of lowering our
manufacturing overhead costs. The key strategic initiatives that led to the
improvements in our manufacturing overhead included the elimination of certain
production and quality control management positions considered as non-essential
and reduction of outside consultants.
-19-
--------------------------------------------------------------------------------Gross profit on product sales for the nine months ended December 31, 2011 was
$116,000, or 16.7% of product sales, compared with a loss of ($43,000), or
(4.2%) of product sales, for the comparable prior year period. The improvement
in gross profit dollars and gross profit as a percentage of product sales is
primarily due to the improvement in our manufacturing cost structure and
efficiencies in our manufacturing processes during the nine months ended
December 31, 2011. Management believes that future growth in product sales
should benefit gross profit on product sales as a result of the strategic
initiatives employed to improve our manufacturing overhead costs and processes.
Research, Development and Regulatory Expenses
Research and development expenses for the nine months ended December 31, 2011
were $455,000 as compared with $550,000 for the comparable prior year period, a
decrease of $95,000 or 17.3%. Our research and development efforts are focused
on developing new applications for our biomaterials. Research and development
expenditures consisted primarily of the salaries of full time employees and
related expenses, and are expensed as incurred. The decrease in research and
development costs is primarily a result of decreased of use outside laboratory
testing services which was required to evaluate a specific raw material that is
expected to be used in connection with the manufacture of our finished polymer
products. We continue to maintain a relatively stable research and development
budget, which management believes meets the needs of our customers and internal
development needs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the nine months ended December
31, 2011 were $1,422,000 as compared with $1,956,000 for the comparable prior
year period, a decrease of $534,000 or 27.3%. The decrease is primarily due to
elimination of non-essential sales and administrative staff positions, lower
stock-based compensation charges, elimination of strategic consultants,
reduction in legal fees, elimination of non-essential trade shows and
advertising programs, and continued cost containment efforts.
Impairment of Long-Lived Assets
As a result of our evaluation of the recoverability of our property and
equipment, we determined an impairment for a single group of production
equipment existed as of June 30, 2011. Accordingly, we recorded an impairment
charge of $15,000 for the three months ended June 30, 2011. No impairment
charges were recorded during the six months ended December 31, 2011.
Interest and Other Expenses
Interest and other expenses for the nine months ended December 31, 2011 were
$224,000 as compared to $0 for the comparable prior year period. Interest
expense of $73,000 is primarily composed of interest incurred on the $800,000
promissory note issued in July 2011, and the amortization of related deferred
finance costs. Loss on extinguishment of promissory note of $151,000 is composed
of the write-off of remaining deferred finance costs and the prepayment
penalties incurred as a result of the early extinguishment of the promissory
note.
-20-
--------------------------------------------------------------------------------Liquidity and Capital Resources
As of December 31, 2011, we had cash and cash equivalents of $860,000, an
increase of $383,000 when compared with a balance of $477,000 as of March 31,
2011.
During the nine months ended December 31, 2011, we had net cash outflows of
$1,357,000 from operating activities as compared with net cash outflows of
$1,701,000 for the comparable prior year period. Our uses of cash for operating
activities have primarily consisted of salaries and wages for our employees;
facility and facility-related costs, material and overhead costs used in
production, laboratory supplies and materials, and professional fees. The
sources of our cash flow from operating activities have consisted primarily of
payments received from customers on the sale of polymer products and fees earned
on license, royalty and development agreements. Net cash flows used in operating
activities decreased by approximately $245,000, as compared to the comparable
prior year period, primarily due to (i) the receipt of $400,000 in connection
with a non-exclusive license agreement and consulting services agreement entered
into with a major international developer and manufacturer of medical devices;
improvements in gross profits due to the positive effect of the restructuring of
our manufacturing cost structure during the fourth quarter of fiscal 2011 and
first quarter of fiscal 2012, and efficiencies in the manufacturing processes;
and (iii) cost containment measures including the elimination of certain outside
consultants and non-essential administrative positions.
During the nine months ended December 31, 2011, we had no net cash flows from
investing activities as compared to net cash outflows of $2,000 from investing
activities for the comparable prior year period, which represented the purchase
of a fixed asset.
During the nine months ended December 31, 2011, we had net cash inflows of
$1,740,000 from financing activities. The increase in cash flows from financing
activities is primarily due to the sale of our land and building, which was sold
for $2,000,000, less approximately $102,000 of transaction costs, and was
accounted for as a sale-leaseback financing transaction. During the three months
ended September 30, 2011, we issued a Commercial Real Estate Promissory Note in
the principal amount of $800,000, net of financing costs of $67,000 (the
"Note"). The Note was secured by our land and building pursuant to the terms and
conditions of the Note and a mortgage in favor of the lender. The principal
amount of the Note was repaid in connection with the December 22, 2011
sale-leaseback financing transaction, and the mortgage was discharged. During
the nine months ended December 31, 2011, we also issued 107,175 shares of our
common stock pursuant to our employee stock purchase plan, for which we received
approximately $8,000. During the nine months ended December 31, 2010 we had net
cash inflows of $8,000 from financing activities in connection with the issuance
of 33,852 shares of our common stock pursuant to our employee stock purchase
plan.
On December 22, 2011, we entered into a sale-leaseback transaction involving our
land and building, which was sold for a purchase price of $2,000,000. The
transaction did not qualify for sale-leaseback accounting and, as a result, was
classified as a financing transaction. Under the financing method, the asset
remains on the condensed consolidated balance sheet and the proceeds received by
us from this transaction are recorded as a financing liability. Payments under
the lease are applied as payments of imputed interest and deemed principal on
the underlying financing obligation. The following table summarizes the
sale-leaseback financing transaction:
Fiscal Years Ending March 31,
2012 $ 70,000
2013 280,000
2014 294,000
2015 335,000
2016 335,000
Thereafter 4,207,000
$ 5,521,000
In connection with the sale-leaseback transaction, we were required to place
$280,000 of the net proceeds in escrow as a prepayment of the calendar year 2012
lease payment.
-21-
--------------------------------------------------------------------------------Our unaudited condensed consolidated financial statements have been prepared on
a going concern basis, which contemplates continuity of operations, realization
of assets and satisfaction of liabilities in the ordinary course of business. We
have experienced negative operating margins and negative cash flows from
operations and expect to continue to incur net losses in the foreseeable
future. During the nine months ended December 31, 2011, we incurred a net loss
of $1,175,000 and used cash from operating activities of $1,357,000. During the
fiscal year ended March 31, 2011, we incurred a net loss of $3,185,000 and used
cash from operating activities of $2,592,000. We anticipate incurring losses at
least through fiscal 2012 as we continue our attempt to grow revenues, expand
selling and marketing activities, expand into new sales territories, and expand
research and development activities to promote new product introductions and
enhancements to existing products. As of December 31, 2011, we had an
accumulated deficit of $35,733,000 and cash and cash equivalents of $860,000.
The ability to attract additional capital investments in the future will depend
on many factors, including the availability of credit, rate of revenue growth,
the expansion of selling and marketing and research and development activities,
and the timing of new product introductions and enhancements to existing
products. Management believes that as of December 31, 2011, our cash position
and cash flows from our fiscal 2012 operations will be sufficient to fund our
working capital and research and development activities through at least the end
of the fiscal year ending March 31, 2012.
Any potential future sale of equity or debt securities may result in dilution to
our stockholders, and we cannot be certain that additional public or private
financing will be available in amounts or on terms acceptable to us, or at
all. On November 24, 2010, the NYSE Amex suspended trading in our common stock
and filed Form 25 on December 6, 2010 notifying the Securities and Exchange
Commission of their decision to delist us because we were not in compliance with
Section 1003(a)(iii) of the NYSE Amex Company Guide with stockholders' equity of
less than $6,000,000 and losses from continuing operations and net losses in its
five most recent fiscal years. On November 24, 2010, our common stock was quoted
on the OTCQB tier of The OTC Markets under the ticker symbol "ASNB." Although
our common stock is quoted on the OTCQB, the delisting of our common stock from
the NYSE Amex could substantially limit our common stock's liquidity and impair
our ability to raise capital. If we are required to raise additional financing,
but are unable to obtain such financing, we may be required to delay, reduce the
scope of, or eliminate one or more aspects of our operations or business
development activities.
Off-Balance Sheet Arrangements
As of December 31, 2011, we did not have any off-balance sheet arrangements that
have, or are reasonably likely to have, a current or future material effect on
our financial condition, results of operations, liquidity, capital expenditures
or capital resources.
-22-
--------------------------------------------------------------------------------
[ Back To TMCnet.com's Homepage ]
|
TMCnet LOGIN
Webinars
