We and our representatives may from time to time make written or oral statements that are "forward-looking," including statements contained in this quarterly report and other filings with the
? Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; ? Our failure to earn revenues or profits; ? Inadequate capital to continue business; ? Volatility or decline of our stock price; ? Potential fluctuation in quarterly results; ? Rapid and significant changes in markets; ? Litigation with or legal claims and allegations by outside parties; and ? Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
Our proposed business strategy is centered on expanding our research and development through scientific collaborations and generating revenue through the sale and licensing of our patented products and services to attempt to capitalize on:(1) adipose tissue and adipose derived stem cell ("ADSC") technologies; (2) scientific breakthroughs incorporating ADSCs that we believe have been rapidly shaping what we believe is the fast growing Regenerative and Personalized Medicine industries; (3) providing these growth industries with a standardized cell processing platform; (4) enhancing the delivery of healthcare through cellular-based therapies and applications which address disease treatment, wound and burn healing, joint repair and management, and personalized health and beauty care; and (5) building a network of physicians for the delivery of our products and services.
We market a proprietary, patent pending clinical processing methodology that collects, prepares and cryo-preserves adipose tissue without manipulation, bio-generation or the addition of animal-derived products or other chemical materials requiring removal from the sample upon retrieval or prior to use. Management believes this core process makes each sample suitable for use in cosmetic tissue grafting procedures or for further processing to adult stem cells for other types of stem cell therapies. Currently, there are numerous therapeutic and orthopedic applications for adipose tissue and adult stem cell treatments identified or in use globally. As of
Products and Services
To date, we have generated minimal revenue; however, subject to, among other factors, obtaining the requisite financing, we believe we are well positioned to leverage our developed and proposed products and services as the basis for a host of Regenerative Medicine uses and future applications.
Our laboratory products and services we intend to offer are:
ACS Laboratories™ ? Manufacturing and sale of our patented ACSelerate-SFM™ and ACSelerate-LSM™ cell culture and differentiation media products ? Creation and shipping to physicians CELLECT™ collection kits ? Creation and sale of client and research grade ATCELL™ ? Contract Manufacturing including Autokine CM™ ? Provide testing services for physicians performing in-office procedures and tissue processing ? Participation and support of all collaborative university and commercial research projects CELLECT® ? Tissue Collection methodology designed for participating physicians to facilitate the collection and overnight shipping of an individual's adipose tissue to our
FDAregistered laboratory for processing testing and storage;
? Tissue processing at our laboratory of adipose tissue received from clients and prepared for long term storage in different configuration sizes allowing future retrieval for tissue grafting procedures or the production of ATCELL™ products for Regenerative Medicine applications; 13 ATCELL™ ? Clinical Processing of the adipose tissue which removes the adipocytes and red blood cells creating the ATCELL™ autologous cell lines for storage, expansion, or differentiation; ? Clinical and Research grade donated ATCELL™ lines for use with collaborative partners in research and application development and optimization, cell morphology and characterization assays, and growth analysis;
? Patented animal serum free cell culture media products for growing human stromal cells (including all cells found in human skin, fat and other connective tissue); ? ACSelerate-SFM™ cell culture media is available animal free (Fetal Bovine Serum (FBS) free), which is designed for clinical grade cell culture; ? ACSelerate-LSM™ is a low FBS (0.05%) version for application development and research purposes.
Our branded product and service offerings include:
[[Image Removed: (CELLECT LOGO)]]
CELLECT®- Validated Collection, Transportation, and Storage System - A clinical solution allowing physicians to collect and ship tissue samples to our laboratory utilizing proprietary and patent-pending methods and materials. The CELLECT® service is monitored in real-time and we believe assures the highest cell viability in the tissue upon laboratory receipt. The CELLECT® service is included in our pending patent application PCT/US2011/39260.
We believe that
[[Image Removed: (ATGRAFT LOGO)]]
ATGRAFT™ Adipose Tissue Storage Service - A clinical adipose tissue (fat) storage solution allowing physicians to provide their patients with multiple tissue/stem cell storage options. The ATGRAFT™ Service; incorporated into one liposuction procedure, permits the individual to access multiple cosmetic or regenerative procedures by using their own stored adipose tissue (from the initial ATGRAFT™ storage). In this way the stored ATGRAFT™can be used as a natural biocompatible filler or cellular therapy application and the client can avoid the trauma of additional or multiple liposuction procedures. We believe potential ATGRAFT™ uses and procedures include breast reconstruction, layered augmentation, buttocks enhancement or volume corrections of the hands, feet, face and neck areas that experience significant adipose tissue (fat) volume reduction as we age. ATGRAFT™ is processed and stored utilizing our cGMP standards so that any stored fat tissue sample may be retrieved from cryopreservation in the future and re-processed to create ATCELL™ our clinical grade stem cell product for use in Regenerative Medicine applications. The AGRAFT™products and services are incorporated into our pending patent application PCT/US13/44621.
The fees we intend to charge for ATGRAFT™ tissue processing and storage range from
ATGRAFT™ Storage and Retrieval fees are determined by the storage configuration as follows:
? Small Sample package - storages of 100ml of adipose tissue or less. Storages sizes are 4ml vials and 25ml cryo storage bags or a single 100ml cryo storage bag. The small storage package is ideally suited for the physician to market additional procedures to the hands, feet, face and neck and for the correction of small surgical defects. ? Medium Sample package - storage of 100ml to 300ml of adipose tissue. Storage sizes are 25ml and 100ml cryo storage bags. The medium storage package is ideally suited for the physician to use in follow up corrections to same day tissue transfers and minor surgical defect corrections as well as to the hands, feet, face and neck and for the future retrieval of stored samples for cellular processing and use in Regenerative Medicine and Cosmetic Products. ? Large Storage package - storage of over 300ml of adipose tissue. Storage sizes are 25ml and 100ml cryo storage bags. The large storage package is ideally suited for secondary large volume procedures such as breast augmentation and buttock lifts as well as corrections to large surgical procedures ? Custom Package - storages for pre planned procedures as in mastectomy or lumpectomy correction. The company adjusts the fees based upon the final storage configuration.
We believe the ATGRAFT™ service creates a significant revenue opportunity for the participating physician to promote additional procedures and generate additional fees from waste material (fat) collected during liposuction procedures. We believe these potential additional fees can be generated with lower physician costs by eliminating the overhead associated with performing a liposuction for each procedure including the general and personnel expenses associated with utilizing a surgical center, hospital operating room or an in office aseptic procedure room. The ATGRAFT™ service is designed to operate under the minimally manipulated regulations contained in both 21 CFR 1271.10 and PHS 361.
[[Image Removed: (ATCELL LOGO)]]
ATCELL™ Adipose Derived Stem Cells (ADSCs) - Clinically processed and characterized ADSCs created using the Company's proprietary Standard Operating Procedures (SOPs) and patented cell culture media. ATCELL™ is the Company's trademarked name for its ADSC and differentiated cell products and processing. The Company can create multiple master and differentiated cell lines for an individual and labels them according to their characterization. (i.e. ATCELL™ (adipose derived stem cells) ATCELL - SVF™ (stromal vascular fraction), ATCELL - CH™ (differentiated chondrocytes), etc.). The lines are custom created for patients desiring to store their cells for their own use in future Regenerative Medicine applications and procedures. The Company intends to charge the client fees ranging from
The Company believes it will earn additional fees based upon the proposed storage configuration of the final ATCELL™sample and for additional culturing in the ACSelerate™ cell culture and differentiation media. We believe cell culturing and differentiation can be performed upon receipt of the raw tissue sample or at any time on a previously processed and cryopreserved ATGRAFT™ or ATCELL™ sample. We believe ATCELL™ is ideally suited for expansion and differentiation into additional cell types utilizing the ACSelerate™ SFM (fetal bovine serum (FBS) free media) or LSM (low 0.05% FBS media) differentiation media. The ATCELL™ products and services are incorporated into our pending patent filing US Serial No. 13/646,647.
The Company's ATCELL™ cell lines are adipose derived stem cells (ADSC), cGMP processed and will be cultured in our patented ACSelerate™ - SFM, and ACSelerate-LSM™ cell culture media. All donated tissue, cells, and research materials that are made available for sale to research institutions will be tested for sterility, disease, lifespan, and population doubling rate (PDL). Additionally we believe these cells are suited for any type of cellular therapy or regenerative medicine research. Cell morphology is confirmed by (i) flow cytometry and (ii) differentiation analysis using ACSelerate™ differentiation media. Each ATCELL™ line can be further cultured and differentiated allowing the Company to provide genetically matched clinical grade cell types. We believe this research methodology provides opportunities for the Company's ATCELL™ and ACSelerate™ products to become the building blocks of final developed commercial applications.
The chart below illustrates the flexibility and capabilities of our products and how they are combined to create new and differentiated lines and their potential applications.
Master Cell Cell Media Used Resulting Cell Potential Applications * Product Type
ATCELL - SVF™ ACSelerate - SFM ATCELL™ Topical wound healing, infusion
™ therapies, Orthopedic, Dental ACSelerate - and Cosmetic applications LSM™ ATCELL™ ACSelerate - SFM Animal free Systemic and chronic disease, ™ clinical grade infusion therapy, regenerative (animal product cultured adult tissue technologies focused on free) stem cell lines structural and stromal tissue in passages P0 loss from disease and injury to P4 throughout the body, wounds, ulcers, burns ATCELL™ ACSelerate - Research grade Systemic and chronic disease, LSM™ cultured adult infusion therapy, regenerative (contains 0.05% stem cell lines tissue technologies focused on Fetal Bovine in passages P0 structural and stromal tissue Serum) to P4 throughout the body ATCELL™ ACSelerate™ - CH ATCELL™- CH Cell Morphology Assays, repair (Chondrocytes) and regeneration of cartilage damage and loss resulting from degenerative disease (rheumatoid and osteoarthritis) trauma, sports injury, etc. ATCELL™ ACSelerate™ - OB ATCELL™ - OB Cell Morphology Assays, repair (Osteoblasts) and regeneration of bone damage and loss due to chronic or systemic disease, trauma and sports injury ATCELL™ ACSelerate™ - AD ATCELL™ - AD Cell Morphology Assays, repair (Adipocytes) and regeneration of stromal and adipose tissue loss from disease, injury, trauma, surgical procedures, lumpectomy, mastectomy, radiation and chemotherapy, ATCELL™ ACSelerate™ - Autokine™ - CM Topical wound healing, infusion SFM therapies, Orthopedic, Dental and Cosmetic applications
* Additional information on stem cell research can be found at www.clinicaltrials.govand www.nih.gov (see adipose tissue, adipose derived stem cells and mesenchymal stem cells).
The ability of the Company to provide clinical grade ATCELL™ lines and ACSelerate™culture and differentiation media for research and development collaborators, partners and other third parties, we believe, extends the Company's ability to in the future become a primary source of clinical grade materials and services necessary to support approved applications and treatments.
[[Image Removed: [ACSELERATE] LOGO]]
ACSelerate™Cell Culture Media Products - Manufactured patented cell culture media products for growing human stromal cells (including all cells found in human skin, fat and other connective tissue). ACSelerate™ cell culture media is available animal serum (FBS) free, which is suitable for human clinical and therapeutic uses; and a low serum version (0.05% FBS) for application development and research purposes is also available.
We believe the most widely used cell culture medium today for growing and differentiating stem cell cultures for in vitro diagnostics and research contains 10% or more FBS. The use of FBS and other animal products in clinical cellular therapy application development and manufacture raises concerns and generates debates within the scientific and regulatory community relating to potential human/animal cross-contamination. These same concerns may also need to be addressed through additional expensive and expansive testing and documentation with the
The Company manufactures several versions of its ACSelerate™ cell culture media including:
? ACSelerate-SFM™ - our flagship clinical grade, cGMP manufactured animal serum free cell culture media, which is ideally suited for the rapid expansion of adipose-derived cell samples for direct use or further culturing into other cell types; ? ACSelerate-LSM™ - our flagship research grade, cGMP manufactured low FBS (0.05%) cell culture media, which is ideally suited for the rapid expansion of adipose-derived cell samples for research and cellular application development or further culturing into other research grade cell types; ? ACSelerate-CY™- for differentiation of ATCELL™ into chondrocytes (ATCELL-CY™), which are suitable for use in cartilage repair applications in knees and other joints for patients suffering from joint injury, osteoarthritis and other diseases that cause degeneration of joint cartilage; 17 ? ACSelerate-OB™- for differentiation of ATCELL™ into osteoblasts (ATCELL-OB™) for the repair of bone injuries resulting from traumatic injury and musculoskeletal diseases; ? ACSelerate-AD™ - for differentiation of ATCELL™ into adipocytes (ATCELL-AD™) for the repair of adipose tissue defects resulting from injury or surgical procedures and is designed for those patients without an appropriate amount of body fat for corrective tissue transfer procedures; ? ACSelerate-MY™- for differentiation of ATCELL™ into myocytes (ATCELL-MY™) for the repair of muscle tissue defects and loss as the result of traumatic injury, surgery or systemic disease; ? ACSelerate-GY™- a clinical grade, non-DMSO (Dimethyl Sulfoxide) cellular cryopreservation media designed to conform to certain
FDAand PHS 361 exemptions available for marketing our ATGRAFT™ service.
The Company is attempting to optimize through further research and testing, additional versions of the ACSelerate™ media product line to develop version for the differentiation of ATCELL™ ADSCs into neural, lung and other specific cell types that may be necessary in future clinical applications. Many of these applications are not currently approved by the
[[Image Removed: [ACS LABORATORIES] LOGO]]
Contract Manufacturing:-Under an agreement with PCS, we manufacture the key ingredient Autokine-CM™* (autologous adipose derived conditioned medium) for PCS' U-Autologous™* anti-aging topical formulation. Each product is genetically unique to the patient and custom blended, deriving its key ingredients from the individual client's own stem cells. The Company provides its CELLECTR Tissue Collection service to collect the required tissue to manufacture the U-Autologous product and processes it under the same cGMP standard operating procedures that it developed for the ATGRAFT™ and the ATCELL™ cell processing services utilizing ACSelerate™ cell culture media. The Company receives collection, processing and long term storage fees and earns a royalty on all U-Autologous product sales. The utilization of the Company's core services in its contract manufacturing relationship provides opportunities for the Company to promote its ATGRAFT™ and ATCELL™ products for an individual's cosmetic purposes.
International Licensing Program - The Company believes that globally, many jurisdictions outside the US currently permit use of cellular therapies and regenerative medicine applications. The Company has received numerous inquiries concerning the sale or licensing of our SOPs, products and services in these jurisdictions. The Company believes that the inquiries to date are a result of the global boom in Medical Tourism and the slow pace of approval of cellular therapies and regenerative medicine applications in the US. To attempt to expand the Company's believed sales, marketing and branding opportunities; the Company currently intends to create an international licensing program.
The Company believes it has designed the program to permit the licensing of the Company's products and services to organizations that meet certain financial and technical criteria. When in place, the proposed licensing program the Company believes will allow for a variety of business relationship including franchising, partnering and joint venturing.
Significant to our proposed international development activities is the proposed global expansion of the
Our strategic approach to product development is to design, develop and launch new products and services that utilize or incorporate our existing products and services. Management believes that this approach will provide the Company with opportunities to produce near term cash flow, strong recurring revenue streams, strong international licensing partners and complementary scientific data. We focus on developing products, services and applications that require tissue collection and processing as the initial requirement to produce cellular therapies and products. These products and services can include adipose tissue and stem cell sample processing and storage as a form of personal "bio-insurance", adipose tissue (fat) storage for cosmetic fat engraftment procedures, and the creation and production of topical applications and ingredients used by other companies in the wound care and cosmetic industries as well as cellular application and bio-materials development.
We intend to focus our efforts on the expansion of our product and service pipelines based upon our intellectual property portfolio, collaborative development relationships, product sales and distribution, and international licensing and partnering opportunities. Our current activities include supporting our university and industry collaborations by providing our products and services with the expectation that our products and services become the basis for new adipose tissue and stem cell based Regenerative Medicine and cellular therapy applications. We believe this strategy allows for our proposed research partners and their application development to begin with clinically harvested and processed adipose tissue and ADSCs (ATCELL™), which we believe can be a significant step toward accelerating the development and approval of new treatments.
Collaboration and Partnering Opportunities
Protein Genomics and Formation of
As a result of the success realized in the early stage of this research collaboration, we entered into a formal joint venture with PGen through the incorporation of Autogenesis, Corp. as required in the 2012 MOU. Each company (CRYO and PGen) initially has an equal 50% ownership interest. All products capable of being commercialized, as well as any new intellectual property, resulting from the ongoing scientific collaboration will be wholly-owned by Autogenesis.
In May of this year,
In December of 2013,
Further collaboration and research agreements are currently in negotiation with
Institutional Review Board Approval of Protocols
In an effort to make it easier for other physicians and researchers to study the safety of adipose derived stem cells ADSCs and stromal vascular fraction (SVF), we sought approval from the
The ICSS IRB we believe thoroughly evaluated every step of our Standard Operating Procedures ("SOPs"), which serve to isolate the SVF or ADSCs from a patient's adipose tissue. The objective of the IRB was to assess these protocols to ensure the highest patient safety possible and appropriate data reporting and collection and, to minimize the risks for individuals participating in innovative research and investigational studies. In 2013, the ICSS IRB approved protocols for an additional IRB reviewed study titled, "Comparative Viability Assessment of Human Adipose Tissue Before and After Cryopreservation". The new study was developed and submitted to support a pending clinical study of our ATGRAFT™ products and services and the development of publications in support of our patented technologies and product marketing efforts.
The Company is making available its processing services utilizing the IRB-approved protocols to physicians and clinical researchers for inclusion in their studies. By adopting these standardized and repeatable protocols (SOPs) and utilizing our laboratory services, researchers can focus their resources on application development rather than creating, validating and managing a clinical laboratory for the preliminary processing of tissue and cellular samples. These studies do not currently involve actual human clinical trials, but affords the IRB the opportunity to endorse our repeatable, standardized and validated processing methodologies for the isolation of SVF and for tissue culture expansion of ADSCs obtained from adipose tissue or SVF as the basis for future human clinical study.
Management intends to pursue additional collaborative and partnering opportunities as a strategic method to enhance awareness of and expand the distribution of our patented products, services, technologies and expertise in the IRB approved clinical processing of adult adipose tissue and ADSCs. We believe that as the pace of clinical trials result reporting increase and peer reviewed papers are published, new opportunities will be create to market our existing products, services and intellectual property portfolio.
Moreover, we believe that the combination of our validated cellular processing capabilities and patented products give us an economical platform to develop and produce cellular therapy applications for injection or intravenous therapy, topical applications, burn and wound healing, joint repair, disease treatments and Cosmeceuticals. The clinical methods and products we have developed are designed to permit a variety of treatments for any patient with their own (autologous) genetically matched raw materials, i.e. ATCELL™ and ATGRAFT™. Autologous cellular therapies have shown promising results for safety and efficacy in a variety of applications in published early stage clinical trial results and application studies.
The Company's methods, testing and facilities are designed to be and the Company believes are in compliance with all current Good Manufacturing Practices (cGMP) and current Good Tissue Practices (cGTP) as defined by the United States Public Health Service Act ("PHS" or the "PHS Act") and the
The Company also is required to comply with a significant body of
21 Intellectual Property Patents
From its very early stages, part of the Company's strategy has been to develop intellectual property and protect such intellectual property. One of the reasons we are developing our IP portfolio is to attempt to ensure and enhance our business flexibility and allow us to gain favorable terms in potential future collaborative efforts with third parties. Our intellectual property portfolio currently includes one issued U.S. patent (No. 7989205, Cell Culture Media Kits and Methods of Use); and the five pending patent applications which are detailed in the following chart:
PATENT TITLE USE OF PATENT APPLICATION # A Business Method for Company Core Tissue (PCT/US2011/39260) "Collection, Cryogenic Storage Collection Processing filed June 6, 2011, and and Distribution of a Biological and Storage Methodology claiming a priority Sample Material" date of June 7, 2010 from provisional application 61/352,217
Systems and Methods for "The Adipose Tissue Digestion U.S. Serial No. Digestion of Adipose Tissue Laboratory Processing 13/646,647 filed Samples Obtained From a Client Methods
October 5, 2012, and for Cryopreservation" claiming a priority date of October 6, 2011 from provisional application 61/544,103 Compositions and Methods for Company Adipose Tissue PCT/US13/44621 Filed "Collecting, Washing, Storage Platform for June 6, 2013 and Cyroprocessing, Recovering and Cosmetic Procedures claiming a priority Return of Lipoaspirate to date of June 7, 2012
Physicians for AutologousAdipose Transfer Procedures" Stem Cell-Based Therapeutic Combining ADRCs with U. S. Serial No. Devices and Methods Biomaterials for healing 61/773,112 filed March and tissue growth 10, 2013 Autologous Serum for Transport Utilization of U.S. Serial No. of Isolated Stromal Vascular Autologous Blood 61/810,970 Fraction or Adipose Derived Stem Components for the filed April 11, 2013 Cells Transport of Adipose Derived Cells to a Patient 22 Trademarks
In addition to our patents, the Company has registered the following trademarks with the U.S. Patent and Trademark Office: American CryoStem® and CELLECT®. We plan to file for registration trademarks for our future products, slogans and themes to be used in our marketing initiatives, including, for example, ATGRAFT™,ACSelerate SFM™; ACSelerate LSM™; and ATCELL™.
Marketing and Distribution
A key objective of our marketing strategy is to position
We have also initiated a direct marketing program focused on reaching plastic and cosmetic surgeons and have an initial group of providers that have begun to offer our services to their patients. This marketing initiative has been implemented using a direct sales approach. This fundamental sales approach at the core of our marketing activities is being strategically and tactically expanded using a combination of in-house sales personnel and outside independent channels.
Our plan also currently provides for a comprehensive integrated marketing approach using various traditional and new media, such as the Internet, social media/blogging, video, print, TV, radio and trade shows to reach targeted potential consumers and promote awareness of our Company and our products and services. The essence of this targeted strategy, capital permitting is to reach the end-users as quickly as possible and to accelerate the adoption curve of our products and services. In the future we plan to utilize outside marketing resources and trade groups to increase the number of physicians and surgeons willing to offer our products and services to their patients.
Development of Regional U.S. Markets
The Company continues to attempt to develop regional relationships to leverage its new products and services through large existing cosmetic surgery and regenerative medicine practices along with growing its current efforts to develop and expand its network of individual physicians and surgeons seeking to adopt the Company's products and services. These efforts are initially focused on surgeons performing liposuction, tissue transfer or regenerative procedures involving the use of adipose tissue. The Company intends to expand its efforts to non-cosmetic medical professionals interested in Regenerative Medicine applications utilizing ADSCs to establish itself as a primary source of collection, processing and preparation of cellular therapies as they are developed and approved for patient use by the
The Stern Center
During our first fiscal quarter ended
23 Corporate Information
Our principal executive offices are located at
As of the date of this quarterly report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business.
We have suffered recurring losses from operations since our inception. In addition, we have yet to generate sufficient internal cash flow from our business operations or successfully raise the financing required to fully develop our business. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.
Our plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii) implementing a plan to generate sales of our proposed products and services. Our continued existence is dependent upon our ability to resolve our liquidity problems and increase profitability in our current business operations. However, the outcome of management's plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.
Results of Operations
Comparison of the Three Months Ended
Revenue. Our total revenue was
Selling, General and Administrative Expenses. Selling, general and administrative expenses ("SG&A") for the three months ended
Net Income (Loss). Our net loss for the for the three months ended
Liquidity and Capital Resources
We had a cash balance of
In the event that we are able to obtain the necessary financing to move forward with our business plan, we expect that our expenses will increase significantly as we attempt to grow our business. Accordingly, the above estimates for the financing required may not be accurate and must be considered in light these circumstances.
We will require additional capital to fund marketing, operational expansion, processing staff training, as well as for working capital. We are attempting to raise sufficient funds would enable us to satisfy our cash requirements for a period of the next twelve (12) to twenty-four (24) months. We have minimal long term debt and have been able to meet our past financial obligations.
In order to finance further market development with the associated expansion of operational capabilities for the time period discussed above we are planning additional fundraising through the sale of our equity and debt securities however we cannot assure you we can attract sufficient capital to enable us to fully fund our anticipated cash requirements during this period. In addition, we cannot assure you that the requisite financing, whether over the short or long term, will be raised within the necessary time frame or on terms acceptable to us, if at all. Should we be unable to raise sufficient funds we may be required to curtail our operating plans if not cease them entirely. As a result, we cannot assure you that we will be able to operate profitably on a consistent basis, or at all, in the future.
As of the date of this quarterly report, the Company's material capital commitments were (i) the continued funding of the expansion of our marketing efforts and laboratory processing capabilities; (ii) an equipment lease in the amount of
The Company has an operating lease for its main office facility located at
The Company has unsecured liabilities without interest of
We anticipate that any further capital commitments that may be incurred will be financed principally through the issuance of our securities. However, we cannot assure you that additional financing will be available to us on a timely basis, on acceptable terms, or at all.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
25 Critical Accounting Policies
We prepare financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), which requires us to make estimates and assumptions that affect the amounts reported in our combined and consolidated financial statements and related notes. We periodically evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.
Basis of Presentation
Our financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United State of America, whereby revenues are recognized in the period earned and expenses when incurred.
Management's Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the assets' carrying amounts against the estimated undiscounted cash flows to be generated by those assets over their estimated useful lives. If the carrying amounts are greater than the undiscounted cash flows, the fair values of those assets are estimated by discounting the projected cash flows. Any excess of the carrying amounts over the fair values are recorded as impairments in that fiscal period.
Statement of Cash Flows
For purposes of the statement of cash flows, we consider all highly liquid investments (i.e., investments which, when purchased, have original maturities of three months or less) to be cash equivalents.
Fair Value of Financial Instruments
Our financial instruments consist of cash and cash equivalents. The fair value of cash and cash equivalents approximates the recorded amounts because of the liquidity and short-term nature of these items.
Recent Accounting Pronouncements
We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe that any future adoption of such pronouncements will have a material impact on our financial condition or the results of our operations.