Quarterly report pursuant to sections 13 or 15(d)

2. Going Concern

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2. Going Concern
9 Months Ended
Sep. 30, 2013
Notes to Financial Statements  
2. Going Concern

At September 30, 2013, the Company had a working capital deficit of $3.6 million and an accumulated deficit of $156.8 million. The Company has continued to sustain losses from operations and has not generated positive cash flow from operations since inception. The Company cannot provide any assurances if and when it will be able to attain profitability. During the nine months ended September 30, 2013, the Company raised approximately $3.6 million, net of expenses, from the sale of its equity securities.

 

As more fully described in note 7, at various times subsequent to May 15, 2013 the Company was out of compliance with the minimum cash balance covenant contained in its senior lending agreement, which was the subject of a waiver and amendment agreement dated August 14, 2013. This agreement reduced the minimum cash balance requirement from $1.0 million to $0.5 million for the period from May 15, 2013 through August 31, 2013, after which time the minimum cash balance requirement reverted to $1 million. The Company has not been in compliance with the $1.0 million minimum cash balance requirement since August 31, 2013, and has entered into a second waiver and amendment agreement which amended the terms of its senior debt to provide that the Company shall maintain a minimum cash bank balance of no less than $1.0 million, in excess of any and all cash balances held by NBS, at all times following December 31, 2013 (see note 7).

 

These conditions, among others, raise substantial doubt about the Company’s ability to continue operations as a going concern. No adjustment has been made in the condensed consolidated interim financial statements to the amounts and classification of assets and liabilities which could result should the Company be unable to continue as a going concern.