Certain statements, other than purely historical information, including
estimates, projections, statements relating to our business plans, objectives,
and expected operating results, and the assumptions upon which those statements
are based, are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements generally are identified by the words "believes,"
"project," "expects," "anticipates," "estimates," "intends," "strategy," "plan,"
"may," "will," "would," "will be," "will continue," "will likely result," and
similar expressions. We intend such forward-looking statements to be covered by
the safe-harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse affect on our operations
and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of
capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should also be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the
Overview COVID-19
The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict at the present time. In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, including orders to close all businesses not deemed "essential," isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. We anticipate that these actions and the global health crisis caused by COVID-19 will negatively impact business activity across the globe. While we have not observed any noticeable impact on our revenue related to these conditions in the past fiscal year, or through the date of this filing, we cannot estimate the impact COVID-19 will have in the future as business and consumer activity decelerates across the globe.
We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, partners, or vendors, or on our financial results.
Recent Developments
On
The agreement was subject to termination, if among other things, 50% of the
license fee is not paid by
On
As partial consideration for the rights conveyed by
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Additionally, the milestones in the initial agreement were changed as shown below:
(i) Successful completion of Phase 2 testing:
(ii) Successful completion of Phase 3 testing:
(iii) Regulatory approval in either 1· the US or EU, whichever happens first:
Results of Operations for the Three and Six Months Ended
Revenues
Our revenue, which we combine from product sales, royalties on patent licenses
and license fees (product development fees), was
The revenue for both periods in 2021 was mainly from license fees with Quoin and the revenue for both periods in 2020 was mainly from license fees with Ovation. We hope to generate more revenues from our licenses with Quoin and Ovation for the rest of the year.
Gross Profit
We had
We had some product sales resulting in a reduced gross profit for 2021 as compared with 2020. We hope that our gross profit increases in 2021 with more revenues from our licenses with Quoin and Ovation expected for the rest of the year, which do not have a cost of revenue component.
Operating Expenses
Operating expenses decreased to
Our operating expenses for all periods consisted mainly of selling, general and administrative expenses.
Our selling, general and administrative expenses for the six months ended
Other Expenses
We had other expenses of
Our other expenses for the three months ended
Net Loss
We recorded a net loss of
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Liquidity and Capital Resources
As of
Operating activities provided
We used cash of
Cash flows used by financing activities during the six months ended
The features of the debt instruments and payables concerning our financing activities are detailed in the footnotes to our financial statements.
Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Going concern - The accompanying 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. We have incurred
cumulative net losses of
Off Balance Sheet Arrangements
As of
Critical Accounting Policies
In
Product sales - Revenues from the sale of products (Invisicare® polymers) are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.
Royalty sales - We also recognize royalty revenue from licensing our patented product formulations only when earned, with no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.
Distribution and license rights sales - We also recognize revenue from distribution and license rights only when earned (and are amortized over a five-year period), with no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.
Costs of Revenue - Cost of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs is not a significant portion of the cost of revenue.
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Accounts Receivable - Accounts receivable is comprised of uncollateralized
customer obligations due under normal trade terms requiring payment within 30
days from the invoice date. The carrying amount of accounts receivable is
reviewed periodically for collectability. If management determines that
collection is unlikely, an allowance that reflects management's best estimate of
the amounts that will not be collected is recorded. Management reviews each
accounts receivable balance that exceeds 30 days from the invoice date and,
based on an assessment of creditworthiness, estimates the portion, if any, of
the balance that will not be collected. As of
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
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