NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The ability of the Company to continue as a going concern is dependent upon developing products that are regulatory approved and market accepted. There is no assurance that these plans will be realized in whole or in part. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Since inception, the Company has incurred an accumulated deficit of $58,239,817 through November 30, 2012. For the years ended May 31, 2012 and 2011, the Company had net losses of $4,444,584 and $3,357,882, respectively and for the six months ended November 30, 2012, the Company had a net loss of $2,784,998. The Company has used $2,351,630 and $2,808,059 of cash in operating activities for the years ended May 31, 2012 and 2011, respectively, and $1,957,984 during the six months ended November 30, 2012. As of November 30, 2012, the Company had cash and cash equivalents of $32,411 and negative net working capital of $2,728,027. The Company has incurred negative cash flow from operating activities since its inception. The Company has spent, and subject to obtaining additional financing, expects to continue to spend, substantial amounts in connection with executing its business strategy, including continued development efforts relating to PRTX-100.
The Company has no significant payments due on long-term obligations since, as discussed in Note 10 Subsequent Events, the maturity of the $2 Million Secured Note was extended by the issuer for 12 months until December 31, 2013. However, the Company has entered into a significant number of contracts to perform product manufacturing and clinical trials in the remainder of 2012 and 2013 and that it will need to raise additional capital in the future to fund the ongoing FDA approval process. If the Company is unable to obtain approval of its future IND applications or otherwise advance in the FDA approval process, its ability to sustain its operations would be significantly jeopardized.
The most likely sources of additional financing include the private sale of the Company’s equity or debt securities or loans from majority stockholders. Additional capital that is required by the Company may not be available on reasonable terms, or at all.