How do they get around this...???
NOTE 2 – GOING CONCERN
The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements during nine months ended September 30, 2010, the Company incurred net losses attributable to common shareholders of $565,121, incurred net losses attributable to common shareholders of $30,769,771 from its inception on August 17, 2004 through September 30, 2010 and used $32,235,695 in cash for operating activities from its inception through September 30, 2010. These factors among others raise substantial doubt that the Company will be unable to continue as a going concern for a reasonable period of time.
The Company's existence is dependent upon management's ability to refinance or restructure its existing indebtedness, and/or to develop profitable operations. The Company’s principal asset is its 31.26% non-controlling stake in Owlstone. The value of the Company’s stake in Owlstone, among other factors, is directly related to Owlstone’s ability to successfully commercialize its technologies. Owlstone’s efforts are principally focused on the development of chemical sensing products using its proprietary technology and there can be no assurance that Owlstone’s efforts will be successful. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Our 8% senior secured convertible notes (the “Notes”) come due in December of 2010 with respect to $3,732,200 in principal amount and in 2011 with respect to an additional $3,607,500 in principal amount. We do not have the cash or other assets to repay the Notes. Our only significant asset is our shares in Owlstone and the value of those shares, based on the price recently paid by private investors in Owlstone, is less than the principal amount of the indebtedness. Furthermore, our Owlstone shares have been pledged as security for the payment of the Notes. Without a substantial increase in the value of the Owlstone shares, we deem it unlikely that a lender would be willing to lend us the funds needed to repay the Notes. Accordingly, if we are unable to negotiate an extension of the maturity of the Notes or otherwise come to terms with the holders of the Notes acceptable to the Company, we may have to seek protection from creditors under the bankruptcy laws. If so, the prospects for the Company and its stockholders will be severely limited.
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