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Friday, March 07, 2008 11:12:46 AM
We have never received revenue from our operations. We have historically relied on equity and debt financings to fund our capital resource requirements. We have experienced net losses since inception. We do not believe that we are a candidate for conventional debt financing and we have not made arrangements to borrow funds under a working capital line of credit. We will be dependent on additional financing to continue our research and development efforts.
The report of our independent accountants on our financial statements at May 31, 2007 contains a qualification about our ability to continue as a going concern. This qualification is based on our lack of operating revenue and limited working capital, among other things. We remain dependent on receipt of capital from outside sources, and ultimately, generating revenue from operations, to continue as a going concern.
All of our investment in research and development activities has been expensed, and does not appear as an asset on our balance sheet. From inception to November 30, 2007 we have spent $937,601 on our research and development efforts to commercialize the p65 technology.
As of November 30, 2007, our working capital deficit of $(592,933) was comprised of current assets of $9,746 and current liabilities of $602,679. This represents a decline in working capital of $121,758 compared to the deficit of $(471,175) at fiscal year end May 31, 2007.
All of our capital resources to date have been provided through the sale of equity securities, proceeds from notes payable and convertible debentures, and advances from stockholder. From inception through November 30, 2007, we received $475,100 in cash through issuance of our common stock. Since we have not generated any cash from operations, we have relied on sale of equity and borrowings to fund all of our capital needs.
The Company's ability to pay its accounts payable and accrued expenses and repay its borrowings is dependent upon receipt of new funding from stockholder advances, private placements or debt financing. One of our stockholders has periodically advanced funds to us to meet our working capital needs. The stockholder is under no obligations to continue these advances. During September, 2007, the stockholder advanced an additional $5,000 to us.
Net cash used in operating activities was $35,123 during the six months ended November 30, 2007, compared to $35,392 during the corresponding period of the prior year. There were no material differences in our operations between the two periods.
Net cash provided by financing activities during the six months ended November 30, 2007 was $10,600, compared to $16,200 during the comparable period of the prior year. We received an advance of $5,000 from a stockholder during the six months ended November 30, 2007, as compared to $8,200 during the six months ended November 30, 2006. In addition, we received proceeds of $5,600 from a convertible bridge loan from The Regency Group LLC, a related party, during the six months ended November 30, 2007. In the comparable period in 2006 we received proceeds of $8,000 from The Regency Group, LLC. During the period ended November 30, 2007, we modified the terms and conditions of previous borrowings from The Regency Group LLC. All of the bridge loans from The Regency Group LLC are payable on December 1, 2007, or earlier date if financing of $1,000,000 is obtained. The borrowings are convertible into common stock of the Company at a rate of $0.0035 per share. Subsequent to November 30, 2007, the due dates of the borrowings were extended to the earlier of January 31, 2008, or the date on which financing of at least $1,000,000 is obtained.
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