Humble question, JDN, what do you see of concern in the 10Q's Liquidity section that differs substantially from what has been filed in the past?
A quick read told me nothing we didn't already know. Here it is:
LIQUIDITY AND CAPITAL RESOURCES
From inception through July 1996, the Company financed its operations primarily through private equity sales and a private placement of convertible subordinated notes. In August 1996, the Company completed its initial public offering of 2,250,000 units, each unit consisting of one share of common stock and one five-year redeemable warrant to purchase one share of common stock at $12.00 per share. The Company received net proceeds from the offering of approximately $15.5 million after deducting underwriting discounts and offering expenses.
At September 30, 1998 the Company had $4.7 million in combined cash, cash equivalents and investment securities available-for-sale. The Company believes that these funds together with revenue earned on contracts will satisfy its budgeted cash requirements for several quarters based on the Company's current operating plan. Actual expenses, however, may exceed the amounts budgeted, and will depend, in part, on the opportunities that arise for commercialization of the VRD technology. The Company may require additional capital earlier to develop products, to respond to competitive pressures, to meet unanticipated development difficulties, or for other working capital purposes. There can be no assurance that any additional financing will be available when needed or, if available, on terms satisfactory to the Company.
During the quarter ended September 30, 1998, the Company established a non-recourse receivables assignment facility with a financing institution to facilitate the Company's working capital requirements. During the quarter, approximately $1,500,000 of receivables were assigned to the financing institution for cash.
Subsequent to September 30, 1998, the Company entered into a lease for office space to house the Company's operations over the longer term by providing space to accommodate planned growth in staff, lab and production space requirements. Under the terms of the lease, the Company would lease between 92,000 square feet and 101,000 square feet in two commitments over the first four years of the seven year term of the lease. Based on the initial commitment of approximately 67,500 square feet, the base rent expense during the first year of occupancy is at approximately $861,000, increasing to approximately $931,000 in the second year. The proposed lease is a triple net lease, which requires the Company to pay operating expenses in addition to the base rent. The lease terms include an option for the Company to extend the initial lease term for one period of five years, a second option to extend for an additional period of two years, and other options to acquire additional space should the need arise. The terms of the lease require the Company to provide the landlord with a lease bond in the amount of $1,150,000 as credit enhancement for the lease. The requirement for the lease bond can be eliminated when the Company meets certain financial criteria as described in the lease. In addition, the Company has
the option to finance up to $420,000 of tenant improvements through the landlord. Should it exercise all or part of this election, the Company would be required to provide the landlord with a letter of credit to support such borrowing. Occupancy is expected late in the first quarter of 1999. The effectiveness of the lease is conditioned on the approval of the board of directors of the landlord.
The Company's future expenditures and capital requirements will depend on numerous factors, including the progress of its research and development program, the progress in its commercialization activities, the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, competing technological and market developments and the ability of the Company to establish cooperative development, joint venture and licensing arrangements. If the Company is successful in establishing co-development and joint venture arrangements, it is expected that the Company's partners would fund certain non-recurring engineering costs for product development. Nevertheless, the Company expects its cash requirements to increase significantly each year as it expands its operations.
(http://sec.yahoo.com/e/981117/mvis.html)
Cheers,
Svejk
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