im sorry i meant may 2011: read up 180MM thats not 1.5MM lol
Basis of Presentation and Continuation as a Going Concern
The consolidated financial statements include the accounts of ANTs software inc. and its wholly-owned subsidiary, Inventa Technologies, Inc. (“Inventa,” collectively referred to as the “Company”). All significant intercompany transactions and accounts have been eliminated.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC, which include all of our accounts and those of our wholly owned subsidiary. As permitted by such rules and regulations, we have condensed or omitted certain information and note disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The unaudited condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of March 31, 2011 and our operating results, cash flows and changes in stockholders’ (deficit) equity for the interim periods presented. We derived the consolidated balance sheet at December 31, 2010 from the Company’s audited consolidated financial statements as of that date. These consolidated financial statements and the related notes should be read in conjunction with our consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K, and in conjunction with our Amendment No. 1 to the Annual Report on Form 10-K/A, for the year ended December 31, 2010 filed with the SEC. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2011 or subsequent years.
The consolidated financial statements contemplate our continuation as a going concern. However, we have had minimal revenues since inception, suffered recurring losses from operations, generated negative cash flows from operations and have an accumulated deficit of $183.97 million as of March 31, 2011 that raise substantial doubt about our ability to continue as a going concern. We have also had significant near-term liquidity needs, including $0.25 million that was due on a line of credit and $2.00 million in notes payable that were due January 31, 2011. During the three months ended March 31, 2011, we received net proceeds of $2.85 million from a $3.00 million subscription receivable (less $0.39 million in fees, including $0.24 million in dispute) from the sale of 5.18 million shares of common stock pursuant to the BRG Agreement, $0.06 million in proceeds from the exercise of warrants covering 0.13 million shares of common stock and net proceeds of $0.57 million net of transaction costs from the Note and Warrant Purchase Agreements. The outstanding balance on the line of credit was repaid and the notes payable were exchanged for new notes with a new maturity date of until January 31, 2013. Furthermore, as a result of the contract with our largest Professional Services customer as determined by historical revenue expiring as of December 31, 2010 and the customer choosing not to renew the contract, we terminated the employment of 20 employees and 14 contractors effective in January 2011. We also terminated the employment of seven research and development employees in May 2011 because of ongoing liquidity constraints. Terminating the employment of research and development personnel will delay the continued development of ACS which may further delay the generation of revenue and profitable operations and may also give rise to impairment of capitalized software and goodwill.
Our ability to continue as a going concern is dependent upon generating profitable operations in the future and obtain the necessary financing to meet obligations and repay liabilities arising from normal business operations when they come due. We anticipate that we will generate profitable operations from marketing and sales of ACS and the growth of our Professional Services offerings for ACS implementations if we are able to continue to secure necessary funding. However we do not expect that the associated revenue will fully support our operations over the next several quarterly periods. If we do not generate profitable operations or obtain the necessary financing, we will not have enough operating funds to continue to operate as a going concern. Securing additional sources of financing to enable us to continue the development and commercialization of our proprietary technologies is difficult and there is no assurance of our ability to secure such financing. A failure to generate profitable operations or obtain additional financing will prevent us from making expenditures that are needed to pay current obligations, allow the hiring of additional development personnel and continue development of its software and technologies. We continue actively seeking additional capital through private placements of equity and debt.
At current cash levels, we believe we have sufficient funds to only operate into the second quarter of 2011. We are actively seeking additional financing. Should additional financing not be obtained, we will not be able to execute our business plan or meet our obligations and the recoverability of our goodwill may become impaired. Our plans, if successful, will mitigate the factors that raise substantial doubt about the ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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