ORGANOVO HOLDINGS, INC. The following management's discussion and analysis of financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the fiscal year endedMarch 31, 2020 . This discussion and analysis contains forward-looking statements, such as statements related to our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions such as "will," "may," "could," "should," or similar expressions, identify certain of these forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to risks and uncertainties, including those described in this Quarterly Report on Form 10-Q, as well as the risk factors disclosed in our Annual Report on the Form 10-K for the fiscal year endedMarch 31, 2020 , filed with theSecurities and Exchange Commission onMay 28, 2020 , that could cause our actual results or events to differ materially from those expressed or implied by such forward-looking statements. Except to the limited extent required by applicable law, the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.
Basis of Presentation
The unaudited condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with theSecurities and Exchange Commission (the "SEC") instructions to Quarterly Reports on Form 10-Q. Accordingly, the unaudited condensed consolidated financial statements presented elsewhere in this Form 10-Q and discussed below are unaudited and do not contain all the information required byU.S. generally accepted accounting principles ("GAAP") to be included in a full set of financial statements. The audited financial statements for the year endedMarch 31, 2020 , filed with theSEC on Form 10-K onMay 28, 2020 include a summary of our significant accounting policies and should be read in conjunction with this Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in this Form 10-Q. All such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results of operations for the entire year. Overview We are an early-stage biotechnology company that has focused on pioneering the development of bioprinted 3D human tissues that emulate key aspects of human biology and disease.
Historical Operations and Strategic Alternatives Process
Prior toAugust 2019 , we have focused our efforts on developing our in vivo liver tissues to treat end-stage liver disease and a select group of life-threatening, orphan diseases, for which there are limited treatment options other than organ transplantation. We also explored the development of other potential pipeline in vivo tissue constructs in-house and through collaborations with academic and government researchers. In the past, we also explored the development of in vitro tissues, including proof of concept models of diseased tissues, for use in drug discovery and development. InAugust 2019 , after a rigorous assessment of our in vitro liver therapeutic tissue program, we concluded that the variability of biological performance and related duration of potential benefits no longer supported an attractive opportunity due to redevelopment challenges and lengthening timelines to compile sufficient data to support an IND filing. As a result, we suspended development of our lead program and all other related in-house pipeline development activities. Our Board also engaged a financial advisory firm to explore our available strategic alternatives, including evaluating a range of ways to generate value from our technology platform and intellectual property, our commercial and development capabilities, our listing on the Nasdaq Capital Market, and our remaining financial assets. These strategic alternatives included possible mergers and business combinations, sales of part or all of our assets, and licensing and partnering arrangements. We implemented various restructuring steps to manage our resources and extend our cash runway, including reducing commercial activities related to our liver tissues, except for sales of primary human cells out of inventory, negotiating an exit from our long-term facility lease, selling various assets, and reducing our workforce. Additionally, inNovember 2019 , we sold certain inventory and equipment and related proprietary information held by our wholly-owned subsidiary,Samsara Sciences, Inc. ("Samsara"), and as a result of such sale, Samsara ceased its operations. After conducting a diligent and extensive process of evaluating strategic alternatives and identifying and reviewing potential candidates for a strategic acquisition or other transaction, which included the receipt of more than 27 non-binding indications of interest from interested parties and careful evaluation and consideration of those proposals, and following extensive negotiation with 19 -------------------------------------------------------------------------------- Tarveda, onDecember 13, 2019 , we entered into a merger agreement with Tarveda (the "Merger Agreement"). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, our wholly-owned merger subsidiary would merge (the "Merger") into Tarveda, with Tarveda surviving the Merger. The Merger Agreement included various conditions to the consummation of the Merger, including approval by our stockholders at a Special Meeting of Stockholders scheduled forApril 7, 2020 (the "Special Meeting"). At the Special Meeting, the Merger was not approved by our stockholders. As a result, we terminated the Merger Agreement with Tarveda. Pursuant to the terms of the Merger Agreement, we were obligated to reimburse certain of Tarveda's merger-related expenses not to exceed$300,000 , which was offset by Tarveda's portion of shared expenses incurred byOrganovo in fiscal 2020.
The Cooperation Agreement and Advisory Nominees Proposal
Following the Special Meeting and the termination of the Merger Agreement, our Board continued to solicit stockholder feedback regarding the Company's strategic alternatives and how to maximize stockholder value. In response to feedback from our largest stockholder regarding its desire for the Board to consider opportunities in the 3D bioprinting field and suggestion that the Board should speak withKeith Murphy , the Company's founder, stockholder and former Chief Executive Officer and Chairman, for potential business ideas, our Board initiated discussions withMr. Murphy . Based on these discussions, we entered into a Cooperation Agreement withMr. Murphy onJuly 14, 2020 (the "Cooperation Agreement"). Under the terms of the Cooperation Agreement, the Board appointedMr. Murphy andAdam K. Stern to the Board as Class III directors, and two of the Company's existing directors,Richard Maroun andDavid Shapiro , resigned from the Board and the committees thereof. The Board also agreed to nominate, recommend, support and solicit proxies for the re-election of Messrs. Murphy and Stern at the Company's 2020 Annual Meeting of Stockholders (the "2020 Annual Meeting"). The Board also agreed to nominate, recommend, support and solicit proxies for an advisory stockholder vote (the "Advisory Nominees Proposal") at the 2020 Annual Meeting to appoint three individuals,Douglas Jay Cohen ,David Gobel andAlison Tjosvold Milhous (collectively, the "Advisory Nominees"), to the Board.Mr. Murphy identified each of the Advisory Nominees. If the final vote tabulation for the Advisory Nominees Proposal receives more votes cast "FOR" than "AGAINST" its approval, the Board has approved the appointment of the Advisory Nominees, to be automatically effective immediately following the final adjournment of the 2020 Annual Meeting. In addition, immediately following the appointment of the Advisory Nominees, each of our existing directors (other than Messrs. Murphy and Stern) will resign from the Board, which will result in Messrs. Murphy and Stern and the Advisory Nominees constituting the full membership of the Board (collectively, the "New Director Slate").
Proposed Drug Discovery Business
The New Director Slate has advised us that if the Advisory Nominees Proposal is
approved at the 2020 Annual Meeting, the New Director Slate intends to
recommence operations and focus our future efforts on developing highly
customized human tissues as living, dynamic models of human biology and disease
for use in drug discovery and development. The New Director Slate has advised us
that it believes our proprietary technology can be used to build functional 3D
human tissues that mimic key aspects of native human tissue composition,
architecture, and function. The New Director Slate also believes we can utilize
our proprietary technology to develop highly customized and dynamic models of
human disease, including cell type-specific compartments, prevalent
intercellular tight junctions, and microvascular structures. They believe these
features can facilitate the development of complex, multicellular disease models
for use in the development of targeted therapeutics for various diseases
including, among others, intestine, kidney, skin and breast diseases. Market
opportunities may include externally-partnered or internally-directed drug
discovery and the clinical development of new molecular entities or repurposed
drugs in-licensed from other pharmaceutical companies. The goal of the New
Director Slate is to establish a pipeline of drug candidates in high-value
disease areas, aiming to commence human clinical testing for at least one drug
candidate within a three to four year timeframe.
The New Director Slate advised us that it believes we have a significant
opportunity to change the classic model of drug discovery using 3D bioprinted
human tissues and other 3D models (sometimes known as "organoids" or "organs on
a chip"). They have advised that the Company's new paradigm will involve
augmenting available animal disease models, or replacing animal disease models
altogether, in the discovery process with more relevant disease models utilizing
3D bioprinted human tissues developed by the Company. They believe our 3D
bioprinted human tissues may enable us to study the treatment of human disease
by replicating key aspects of human biology in areas where this is currently a
challenge with existing models. Rather than offering contract research services
(as we have done in the past), they believe we should focus on identifying and
developing our own drug candidates, including from unique compounds or
repurposed drugs in-licensed from other pharmaceutical companies. After
identifying a drug candidate, they may have us out-license the drug candidate or
they may elect to have us develop the drug candidate internally. In addition to
drug discovery, they believe we should continue to evaluate opportunities to
monetize our intellectual property and technologies along the way as a means to
generate funds to support our primary business. They also believe that we should
continue to identify and work with partners and collaborators, including leading
academic research sites, to develop new enabling applications which can support
its discovery and development mission.
20
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If the Advisory Nominees Proposal is approved, the New Director Slate intends to
restart our research and development operations by hiring a team of R&D
professionals with the experience required to develop bioprinted and other 3D
tissues for use in drug discovery, to leverage 3D models of disease to discover
new drug candidates, and to develop new drug candidates for the initiation of
clinical studies.
The New Director Slate has advised us that they expect our research and development staff to grow to seven to ten employees. They also expect to maintain or grow a general and administrative staff of three to five employees to support our operations and reporting requirements as a public company.
If the Advisory Nominees Proposal is approved, the New Director Slate has advised us that they expect to lease sufficient office and laboratory space to support our requirements. They expect that we will need space in the short term in the 3,000-7,000 sq. ft. range, with mixed office and laboratory space. They expect to lease a new facility inSan Diego at prevailing market terms. In the event the Advisory Nominees Proposal is not approved by our stockholders, we may pursue one of the following courses of action, which include but are not limited to the following actions:
• Pursue another strategic transaction similar to the Merger. We may resume
our process of evaluating other candidate companies interested in pursuing a
strategic transaction and, if a candidate is identified, focus our attention
on negotiating and completing such strategic transaction with such
candidate.
• Continue to operate and expand our business. We could elect to continue to
operate and expand our business and pursue licensing or partnering
transactions or utilize our intellectual property and platform technology to
pursue the redevelopment of our liver tissues or the development of
therapeutic tissues currently being studied by our collaborators. Due to the
early development stage of our, and our collaborators', potential
therapeutic tissues, any such redevelopment or development efforts would
require a significant amount of time and financial resources, and would be
subject to all the risk and uncertainties involved in the development of
novel, early stage therapeutic products, research tools, and drug screening
technologies. There is no assurance that we could raise sufficient capital
to support these efforts, that our development efforts would be successful
commercially in the case of research applications or that we could
successfully obtain any required regulatory approvals required to market any
therapeutic product we pursued. We would also need to increase qualified
scientific, sales and marketing, and administrative staffing, lease a
suitable facility and make other expenditures necessary to support these
efforts.
• Dissolve and liquidate our assets. Our Board may determine that it is in the
best interests of the Company and our stockholders to dissolve and liquidate
our assets, subject to approval by our stockholders. In that event, we would
be required to pay all of our debts and contractual obligations and to set
aside certain reserves for potential future claims. If we dissolve and
liquidate our assets, there can be no assurance as to the amount or timing
of available cash that will remain for distribution to our stockholders
after paying our debts and other obligations and setting aside funds for our
contingent liabilities.
COVID-19
InDecember 2019 a respiratory illness caused by a novel strain of coronavirus, SARS-CoV-2, causing the Coronavirus Disease 2019, also known as COVID-19 or coronavirus emerged. While initially the outbreak was largely concentrated inChina it has spread globally. Global health concerns relating to the COVID-19 pandemic have been weighing on the macroeconomic environment, and the pandemic has significantly increased economic volatility and uncertainty. The pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or stay-at-home orders, and business shutdowns. The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak and travel bans and restrictions, quarantines, shelter-in-place or stay-at-home orders, and business shutdowns. In particular, the continued COVID-19 pandemic could adversely impact our operations, including among others, the timing and ability to pursue strategic alternatives, given the impact it may have on the manufacturing and supply chain, sales and marketing and clinical trial operations of potential strategic partners and the ability, if we elect to do so, to advance our research and development activities and pursue development of any of our pipeline products each of which could have an adverse impact on our business and our financial results. However, our employees and consultants have been working remotely prior to the COVID-19 pandemic and we currently believe our operations have not otherwise been negatively impacted by the pandemic. 21 --------------------------------------------------------------------------------
Critical Accounting Policies, Estimates, and Judgments
Our financial statements are prepared in accordance withU.S. generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to stock-based compensation expense, the valuation of impairment of long-lived assets, and the valuation allowance on deferred tax assets. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical. There have been no significant changes to our critical accounting policies sinceMarch 31, 2020 . For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Note 1. Description of Business and Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year endedMarch 31, 2020 , filed with theSEC onMay 28, 2020 . Results of Operations
Comparison of the three months ended
The following table summarizes our results of operations for the three months
ended
Three months ended
June 30, Increase (decrease)
2020 2019 $ %
Revenues $ - $ 668 $ (668 ) (100 %)
Cost of revenues $ - $ 51 $ (51 ) (100 %)
Research and development $ - $ 3,823 $ (3,823 ) (100 %)
Selling, general and administrative $ 2,786 $ 3,315 $ (529 ) (16 %)
Other income $ 19 $ 198 $ (179 ) (90 %)
Revenues
We had no revenue for the three months ended
Costs and Expenses
Cost of Revenues
Cost of product and service revenues, which reflects expenses related to manufacturing our products and delivering services was zero for the three months endedJune 30, 2020 , compared to approximately$0.1 million for the three months endedJune 30, 2019 . The decrease was due to the cessation of revenue generating activities following our decision to restructure operations to preserve capital as we pursue various strategic alternatives. 22 --------------------------------------------------------------------------------
Research and Development Expenses
The following table summarizes our research and development expenses for the
three months ended
Three months ended Three months ended Increase (decrease)
June 30, 2020 % of total June 30, 2019 % of total $ %
Research and
development $ - 0 % $ 3,528 92 % $ (3,528 ) (100 %)
Non-cash stock-based
compensation - 0 % 164 4 % (164 ) (100 %)
Depreciation and
amortization - 0 % 131 4 % (131 ) (100 %)
Total research and
development
expenses $ - 0 % $ 3,823 100 % $ (3,823 ) (100 %)
Research and development expenses were zero, a decrease of $3.8 million , or
100%, from the prior year period as we eliminated all research and development
activities following our decision to pursue our strategic alternatives during
the second quarter of fiscal 2020. This action caused a $1.7 million reduction
of personnel related costs, a $0.8 million reduction in lab supply costs, a $0.8
million reduction in facilities costs, and a $0.5 million reduction in all other
costs. The Company's average full-time research and development staff decreased
from an average of forty-one full-time employees for the three months ended June
30, 2019 to an average of zero full-time employees for the three months ended
June 30, 2020 . Going forward, based on the outcome of the Advisory Proposal vote
and strategic decisions that the Board may make, the Company may elect to pursue
renewed research and development activities with an associated increase in
expenses.
Selling, General and Administrative Expenses
The following table summarizes our selling, general and administrative expenses
for the three months ended
Three months ended Three months ended Increase (decrease)
June 30, 2020 % of total June 30, 2019 % of total $ %
Selling, general and
administrative $ 1,857 67 % $ 2,185 66 % $ (328 ) (15 %)
Non-cash stock-based
compensation 925 33 % 1,056 32 % (131 ) (12 %)
Depreciation and
amortization 4 0 % 74 2 % (70 ) (95 %)
Total selling, general
and
administrative
expenses $ 2,786 100 % $ 3,315 100 % $ (529 ) (16 %)
For the three months ended June 30, 2020 , selling, general and administrative
expenses were approximately $2.8 million , a decrease of $0.5 million , or 16%,
over the prior year period as we restructured our operations to preserve capital
as we explore strategic alternatives. These actions caused a $0.9 million
decrease in personnel costs and a $0.1 million decrease in all other costs,
which were offset by a $0.3 million increase in corporate costs and a $0.2
million increase in allocated facilities costs. Our average selling, general and
administrative headcount was six full-time employees for the three months ended
June 30, 2020 compared to twenty-one full-time employees in the prior year
period.
Other Income (Expense)
Other income was less than$0.1 million for the three months endedJune 30, 2020 as compared to$0.2 million for the three months endedJune 30, 2019 , due to a decrease in interest income caused by lower average yields and investment balances.
Financial Condition, Liquidity and Capital Resources
Until our recent decision to explore strategic alternatives, we had primarily
devoted our efforts to developing and commercializing a platform technology to
produce and study living tissues that emulate key aspects of human biology and
disease, raising capital and building infrastructure. Following the decision to
explore strategic alternatives, we have taken steps to manage our resources and
extend our cash runway, including reducing all commercial and research and
development laboratory activities, except for sales of primary human cells out
of inventory, negotiating an exit from our long-term facility lease, selling lab
equipment and inventory, and reducing our workforce to the minimum level
necessary to explore and support these strategic alternatives and maintain our
core intellectual property, licenses and collaborations with research
institutions and universities.
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As of June 30, 2020 , we had cash and cash equivalents of approximately $24.8
million and an accumulated deficit of $282.2 million . We also had negative cash
flow from operations of $2.6 million during the three months ended June 30,
2020 . At March 31, 2020 , we had cash and cash equivalents of approximately $27.4
million and an accumulated deficit of $279.5 million .
At June 30, 2020 , we had total current assets of approximately $25.5 million and
current liabilities of approximately $0.8 million , resulting in working capital
of $24.7 million . At March 31, 2020 , we had total current assets of
approximately $28.3 million and current liabilities of approximately $1.8
million , resulting in working capital of $26.5 million .
The following table summarizes the primary sources and uses of cash for the
three months ended
Three months ended
June 30,
2020 2019Net cash (used in) provided by:
Operating activities$ (2,570 ) $ (5,935 ) Investing activities 2 1 Financing activities (1 ) 4,944
Net decrease in cash, cash equivalents, and restricted cash
Operating activities Net cash used in operating activities for the three months endedJune 30, 2020 was approximately$2.6 million as compared to$5.9 million used in operating activities for the three months endedJune 30, 2019 . This$3.4 million decrease in operating cash usage can be attributed primarily to a$3.1 million improvement in the net loss less depreciation and amortization and stock-based compensation, resulting from the Company's restructuring and reduction of headcount and a$0.3 million reduction in the change in working capital between the two periods. Investing activities
Net cash provided by investing activities was less than
Financing activities
Net cash used by financing activities was less than$0.1 million during the three months endedJune 30, 2020 compared to net cash provided by financing activities of approximately$4.9 million during the three months endedJune 30, 2019 . Financing in the prior year period was driven by the sale of common stock through at-the-market ("ATM") offerings.
Operations funding requirements
ThroughJune 30, 2020 , we have financed our operations primarily through the sale of common stock in public offerings, the private placement of equity securities, from revenue derived from products and research-based services, grants, and collaborative research agreements, and from the sale of convertible notes. Throughout the strategic alternatives assessment process, the Company has taken steps to manage its resources and extend its cash runway including selling various assets and reducing its workforce to the minimum level necessary to explore and support these strategic alternatives as well as to support the remainder of the Company's on-going business activities and assets, including its intellectual property platform and collaborations with research institutions and universities. The Company believes its cash and cash equivalents on hand will be sufficient to meet its financial obligations for at least the next 12 months of operations If the Advisory Proposal is approved, and the New Director Slate recommences the Company's operations and focuses its efforts on drug discovery and development, the Company will need to raise additional capital to implement this new business plan. The Company cannot predict with certainty the exact amount or timing for any future capital raises. 24
-------------------------------------------------------------------------------- Based on our use of the 2018 Shelf throughJune 30, 2020 , we cannot raise more than$81.3 million in future offerings under the 2018 Shelf, including through our at-the-market program. Having insufficient funds may require us to relinquish rights to our technology on less favorable terms than we would otherwise choose. Failure to obtain adequate financing could eventually adversely affect our ability to operate as a going concern. If we raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. We cannot be sure that additional financing will be available if and when needed, or that, if available, it can obtain financing on terms favorable to its stockholders. Any failure to obtain financing when required will have a material adverse effect on the Company's business, operating results, financial condition and ability to continue as a going concern. OnJune 25, 2019 , we received a notice letter from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we no longer meet the requirement to maintain a minimum closing bid price of$1 per share, as set forth in Nasdaq Listing Rule 5450(a)(1). OnDecember 26, 2019 , we obtained an additional compliance period of 180 calendar days by electing to transfer to The Nasdaq Capital Market to take advantage of the additional compliance period offered on that market. OnApril 17, 2020 we received an additional notice letter from Nasdaq indicating that based on extraordinary market conditions, Nasdaq has determined to toll the compliance periods for bid price and market value of publicly held shares requirements (collectively, the "Price-based Requirements") throughJune 30, 2020 . Accordingly, since we had 66 calendar days remaining in the compliance period as ofApril 16, 2020 , we will, upon reinstatement of the Price-based Requirements, still have 66 calendar days fromJuly 1, 2020 , or untilSeptember 4, 2020 , to regain compliance. We can regain compliance, either during the suspension or during the compliance period resuming after the suspension, by evidencing compliance with the Price-based Requirements for a minimum of 10 consecutive trading days. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market. We intend to comply with the Price-based Requirements by effecting a Reverse Stock Split.
As of
In addition, our 2008 Equity Incentive Plan provided for the issuance of up to 1,521,584 shares of common stock upon the exercise of outstanding stock options, of which 896,256 shares were issued. The 2008 Equity Incentive Plan terminated onJuly 1, 2018 . The 2012 Equity Incentive Plan, as amended, provides for the issuance of up to 28,553,986 shares of our common stock, of which 14,158,654 shares remain available for issuance as ofJune 30, 2020 , to executive officers, directors, advisory board members, employees and consultants. Additionally, 1,500,000 shares of common stock have been reserved for issuance under the 2016 ESPP, of which 1,188,718 shares remain available for future issuance as ofJune 30, 2020 . Lastly, 2,246,918 shares of common stock have been reserved for issuances under Inducement Award Agreements. In aggregate, issued and outstanding common stock, shares underlying outstanding warrants, and shares issuable under outstanding equity awards or reserved for future issuance under the 2008 and 2012 Equity Incentive Plans, the Inducement Award Agreements, and the 2016 ESPP total 157,975,208 shares of common stock as ofJune 30, 2020 .
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We have certain warrants and options outstanding but we do not expect to receive sufficient proceeds from the exercise of these instruments unless and until the underlying securities are registered, and/or all restrictions on trading, if any, are removed, and in either case the trading price of our common stock is significantly greater than the applicable exercise prices of the options and warrants.
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